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WIMAX OPPORTUNITIES - Town and Country
WiMAX is often regarded as an economically attractive technology in rural areas with 
no wired networks, but it is also being increasingly positioned as an alternative to DSL in metro areas within developed countries, says Howard Wilcox
The global opportunity for WiMAX 802.16e to deliver 'local loop' broadband connectivity will begin to take off over the 2009 to 2011 period, according to Fixed WiMAX: Opportunities for Last Mile Broadband Access 2008 - 2013, a new report from Juniper Research. There are significant prospects for WiMAX as a DSL substitute technology, and the fixed WiMAX subscriber base is forecast to approach 50 million globally by 2013.
Currently, there are over 250 802.16e WiMAX networks being trialled across the world, and a relatively small but rapidly growing number of commercial networks in service. With a profusion of trial and network contract announcements over the last 12 to 18 months, WiMAX is now much more of a market threat to existing broadband access technologies such as DSL.
An analysis of the primary target market focus of each of over 50 service providers which have announced commercial network contracts revealed that the stand-out market focus is offering an alternative to DSL. The analysis illustrated that WiMAX is well suited to rapid deployment in many underserved areas.
Developing countries in Eastern Europe, the Middle East and Africa, and Asia, have shown most interest in WiMAX to date: many of these countries are part of the "underserved" world from a broadband perspective and are seeking pure Internet connectivity - fast. These countries can enjoy the technology "leapfrog" effect, jumping from no or limited connectivity to multimegabit, state of the art broadband. In Poland, for example, four carriers received nationwide 3.6 GHz WiMAX licences in 2006 including Netia, cable television operator Multimedia Polska, Crowley and Exatel. Netia has contracted with Alvarion for a 20-city national network for business and residential users, while Crowley has contracted with Redline and Multimedia Polska with Airspan, but Exatel's network has been delayed. Multimedia Polska is targeting homes in Central and Eastern Poland that have been previously underserved with Internet access. Meanwhile, Russia is a very fragmented market, but with a growing number of existing and aspiring broadband operators. All of the operators are focusing in the short to medium term on providing fixed services in underserved areas. In mid May 2008, there was a significant development with Virgin Group entering Russia via the nationwide launch of its high-speed broadband WiMAX network - known as Virgin Connect - and operated by Trivon; the service has been launched in 32 Russian regions including Moscow, St. Petersburg and the 20 largest cities.
Although WiMAX is often regarded as an economically attractive technology in rural areas with no wired networks, it is being increasingly positioned as an alternative to DSL in both rural and metro areas in developed countries. Typically, WiMAX service providers are differentiating their services either by offering higher speeds than DSL, for example, for customers located at the distance limit from their local exchange, or by emphasising ease and speed of set-up for customers. WiMAX will therefore both cater for broadband growth, and replace some existing DSL connections. Service providers in a number of developing countries such as India are also targeting rural areas that have no wired networks at all, to provide basic telephony as well as more advanced services. In these communities, WiMAX services will need to be priced at affordable levels.
The next most popular market focus is for high-end business users - those typically spending $400 to $500 per month on broadband services - who require secure, very high-speed connections, and that have more demanding bandwidth needs such as hosting their own servers, but who also require some element of nomadic working. Again here, WiMAX is proving attractive to subscribers who have used DSL up until now.
The survey showed that the vast majority of service providers are concentrating on providing fixed broadband services to begin with, although many have the intention of developing mobile offerings once their networks and services are established.
However, there a number of issues that WiMAX as an ecosystem needs to address including:
- Availability of suitable devices: WiMAX has great potential to integrate broadband connectivity in a wide range of consumer devices such as MP3 players, cameras and satellite navigation units as well as more traditional items such as laptops and dongles. The industry must ensure that reliable, certified devices are readily available so that customers are not held back or discouraged from subscribing due to supply issues. In early April 2008 the WiMAX Forum announced that the first eight Mobile 802.16e WiMAX products received the WiMAX Forum Certified Seal of Approval. There is an opportunity to drive and sustain market takeoff through a steady stream of innovative devices. The "push" to achieve market launch needs to be counterbalanced by ensuring the availability of components and volume of production to meet anticipated demand - at the right attractive price point.
- Timely network construction: service providers need to complete build programmes on time to achieve sustainable WiMAX based businesses and they also need to translate the many, usually well-publicised trials, into commercial networks offering reliable and attractively-packaged services. In future, users will take this as a given, and will become less tolerant of unreliability as broadband becomes inextricably linked with everyday life. The announcement by Sprint and Samsung in mid May 2008 that WiMAX has met Sprint's commercial acceptance criteria including overall performance, handoff performance and handoff delay is a very timely boost for the technology: the eyes of the (WiMAX and mobile broadband) world are on developments there. Commercial launches in Baltimore and Washington DC are planned for later in 2008 by Sprint. Further success will counteract the view in some parts of the industry that WiMAX is always coming tomorrow.
- Brand identification and service differentiation: WiMAX service providers need to avoid entering the market on the basis of price: this will be a difficult battle to win against established DSL and mobile operators, especially in developed markets like Western Europe. These established (usually 3G) operators already have strong brand image and sophisticated marketing, and in some countries such as Ireland and Scandinavia are already enjoying success in the DSL substitution market.
With the plethora of broadband access technologies available - such as DSL, satellite, cable, HSPA, EVDO, WiMAX - not to mention the future technologies such as LTE, people often ask if there is going to be a technology that wins out over the rest. Juniper Research discussed this issue with around 30 executives from a variety of vendors, service providers and industry associations. Respondents were unanimous in viewing WiMAX as complementary and take a pragmatic approach - if there is a use for it, and the business case is sustainable, it will be deployed. Telecoms operators need to consider all alternatives when making an investment.
Most new technology launches face issues like these, and with the impetus that WiMAX now has in the marketplace, it is well-placed to grow. Juniper's headline forecasts include:
- The annual fixed WiMAX global market size will exceed 13m subscribers by 2013
- The WiMAX device market - comprising CPE, chipsets, minicards, and USB dongles - will approach $6bn pa by 2013
- The top 3 regions (Far East, N. America and W. Europe) will represent over 60 per cent of the $20bn p.a. global WiMAX service revenues by 2013.
In fact, WiMAX is forecast to substitute for nearly 50 million or 12 per cent of the DSL and mobile broadband subscriber base globally by 2013:
Howard Wilcox is a Senior Analyst with Juniper Research in the UK.
www.juniperresearch.com
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