A major tenet of Intel Capital's investment strategy has always been to foster an ecosystem in which its parent's technology can flourish. Nowhere has this been put into action more by Intel Corp., the world's biggest chipmaker, than in WiMax, the long-range, high-speed wireless broadband technology.

Since early this decade, the Santa Clara, Calif.-based company has invested roughly $1.9 billion in 18 WiMax companies, from chipset maker Beceem Communications Inc. to wireless backhaul equipment maker Bridgewave Communications Inc. The majority of that amount, however, has gone to U.S. WiMax service provider Clearwire Corp., into which Intel has poured $1.62 billion since 2004. Intel is the company's second-largest shareholder, with 12%, after majority owner Sprint Nextel Corp., which merged its wireless broadband network with Clearwire in a $14.5 billion deal that closed in December.

Its big investments continue as Intel bets that WiMax will be the winning mobile Internet technology, among others. Its latest move came last month, when Intel Capital invested $43 million in UQ Communications Inc., a Tokyo-based WiMax service provider that ambitiously aims to offer connectivity to 90% of Japan by 2012.

The investment is the culmination of 1-1/2 years of work on the part of Intel and UQ's other investors, which include KDDI Corp., East Japan Railway Co., Kyocera Corp., Daiwa Securities Group Inc. and the Bank of Tokyo-Mitsubishi UFJ Ltd. The investors formed the venture in 2007 to apply to Japanese regulators to acquire spectrum. Intel contributed some early money, then KDDI, Japan's second-largest telecom, assembled UQ's management team, says Sriram Viswanathan, an Intel Capital managing director and the general manager who heads Intel's WiMax efforts.

"This is huge," Vis­wa­nathan says, noting that customers in Japan already expect high-performance broadband Internet access. "Our strategy has been really to drive WiMax as a way to bring broadband wireless on a global basis. UQ is a very compelling case for WiMax in a mature market."

Intel and WiMax have notched victories along the way. The company says the technology has been deployed by more than 430 million people in 139 countries. And it has won over some stubborn opponents. Cisco Systems Inc., for example, had been skeptical about the promise of WiMax. But Cisco did a U-turn when it acquired WiMax gear maker Navini Networks Inc. (which was backed by Intel Capital) for $330 million in 2007. And just last month, Cisco said it would build infrastructure and mobile access devices for Clearwire.

Yet WiMax skeptics remain. They argue that most of the deployments of the service are by small providers (Clearwire and UQ are the only ones considered "Tier 1" service providers) that do not have the economies of scale necessary to thrive in a market with relatively thin margins and little access to credit, especially in the current economic climate.

More importantly, there are looming competitive threats from rival broadband technologies. As Intel claims, WiMax is the only fourth-generation, or 4G, mobile broadband solution available now. But well-armed alternatives are coming. For example "long-term evolution," or LTE, is being pushed by AT&T Inc., Verizon Wireless and others and is set to be rolled out early next year.

While WiMax has a head start on LTE, Scott Siegler, a senior analyst with Dell'Oro Group, predicts that the new technology will trump WiMax, in part because cellular technologies provide some form of backup network when a user roams out of a high-speed network. Exiting a WiMax service area leaves a Web surfer high and dry. Siegler estimates that WiMax infrastructure revenue will be about $2.2 billion in 2013, while LTE sales will run to $2.7 billion.

"LTE is going to be the dominant technology," Siegler says. "The whole cellular world is migrating to LTE, so it has huge economies of scale and lower infrastructure costs."

Intel is understandably bullish on WiMax technology, since it has spent so much on the technology, both in external investments and on the development of its WiMax chipsets for laptops and other mobile devices.

The UQ Communications investment will represent a test for WiMax, because Japan, as a society, is accustomed to the Internet speeds provided by the fiber-optic hookups that connect homes to the Web. If Tokyo train commuters can browse the Internet wirelessly, via laptop, at data rates similar to accessing the computer's hard drive, as Viswanathan claims, WiMax might have a chance to achieve the "life-changing experience" he says it promises.

But to justify the amount of capital it has absorbed, the technology will also have to hold its own against the competitive threats on the horizon for Intel's WiMax ecosystem.