WiMax could ‘transform’ telecoms market

18 Feb 2005

Wireless broadband technology WiMax has the ability to compete with DSL and cable-modem services without the need for heavy regulation. This could have a significant impact on the telecom industry, according to a study by analyst firm In-Stat.

WiMax supports point to multi-point broadband wireless access rates up to 2Mbps plus over a minimum coverage area of three to five miles. Low network investment costs and non-line-of-sight operation over licensed or non-licensed radio spectrum makes WiMax an attractive technology.

“Yet, the market success of WiMAX is far from certain,” said Keith Nissen, an analyst with the high-tech market research firm In-Stat.

“Consumer broadband markets cannot support an unlimited number of broadband wireless access service providers. Increased broadband competition, price compression and high subscriber acquisition costs threaten to drive margins ever lower.”

By 2009, In-Stat forecasts that approximately 3pc of total broadband subscribers, or 8.5 million subscribers worldwide, will be using WiMax-based broadband wireless access (BWA) services. Nearly 4.5 million of these wireless broadband subscribers will also subscribe to Voice over WiMax (VoWiMax) services.

A maximum 15pc market share is likely available to BWA operators in metropolitan areas.

Emerging country markets such as Ireland typically have antiquated technology, poor quality outside exchanges and limited public network capacity. WiMax, In-Stat recommends, is especially well suited to these applications.

There has been speculation that the advent of WiMax may threaten the revenues, not only of fixed-line telcos, but also mobile operators. However, last week an analyst note from Ovum rowed against popular opinion that the advent of WiMax could portend the demise of mobile operators. Instead it may afford operators the opportunity to strategically complement 3G services to business users by enabling higher data rates.

It is also predicted to be a hit in markets with poor telecoms infrastructure. Ireland and Australia – markets with high gross domestic product but low broadband penetration – were cited in a study last year as the markets with the most to gain for fixed and mobile network operators that deploy new wireless broadband standards such as WiMax and MobileFi to augment the roll out of DSL and 3G services, a new global study has found. The joint global study by Bear, Stearns & Co International and The Management Consulting Group, a provider of consulting services to the global communication industry, said that mobile service presents the greatest opportunity for WiMax (802.16) and MobileFI (802.20) but will take longer to develop and will require licensed spectrum due to quality-of-service requirements.

By John Kennedy