WiMAX, 4G, Markets, Prospects, Wireless broadband, Global: For some, WiMAX offers a unique proposition: the ability to provide a wide-area IP network based on open standards. Others, however, are sceptical when it comes to developing markets. Analysys Consulting can not be accused of this; they believe there are signs of market dynamics that could yet ensure a healthy future for WiMAX. But the key market driver Analysys identify could be more personal than many operators expect...

The difficulties in creating a viable WiMAX business model in developed markets have often been discussed. Many reasons have been cited for this, such as:

• with DSL and cable coverage typically in excess of 95% of potential customers, the opportunity for WiMAX as an in-fill is limited to very few households – and these would be expensive to reach;
• the ongoing improvements to cable and DSL networks mean that WiMAX will not be able to compete head-on with fixed networks in terms of bandwidth;
• deployments of WiMAX in 3.5GHz spectrum have proved to require very dense (and therefore expensive) networks, and to offer poor in-building coverage with self-installed customer equipment.

Analysts have often focused on why WiMAX may fail, but it is also important to consider why it may succeed. WiMAX offers a unique proposition: the ability to provide a wide-area IP network based on open standards. Potentially, this will enable a multitude of devices to have wireless connectivity at a nominal cost of US$5–10 in the long term (something that the current CDMA licensing regime does not seem to permit).

The deployment of WiMAX in developed markets could be driven by:

• Demand for “personal broadband.” In the most developed markets, broadband penetration is nearing saturation, and further growth for broadband players will come either through content such as IPTV provided over higher bandwidth, or personal broadband where each user has their own device with Internet access delivered over wireless networks. Therefore there are opportunities for WiMAX in markets where a large proportion of fixed broadband connections are delivered by providers that do not have access to a mobile network (see figure 1).

Figure 1 Opportunity for WiMAX to deliver personal broadband (Source: Analysys, GlobalComms, 2007)

• Demand for “device broadband” The key driver for the development of personal broadband could be the increasing use of personal devices that have wide-area IP connectivity. The proliferation of such equipment is illustrated by the growth in the market for personal gaming devices (which already boast WiFi connectivity) and iPods (competitors have begun to offer WiFi connectivity). Sales of these devices in Japan are running at more than 30% of mobile phone sales and 15% in North America.

Exhibit 2 Proliferation of personal devices compared with new mobile phone sales (Source: Analysys, company data)

• more info: www.analysys.com