The future of WiMAX
Last week I chaired the Acevents WiMAX Summit and this gave me a great opportunity to update myself on where this technology is headed. In general this update confirmed our own analyses, but it also helped to crystallise some of the issues.
Alternative to mass market fixed broadband - Failed
WiMAX started off looking at opportunities for the technology to be used as an alternative to fixed (DSL-based) broadband. It was a challenger’s product, but by the time the first commercially viable products began to arrive the incumbents were well and truly underway with their ADSL rollouts, and it quickly became clear that WiMAX could not compete with fixed broadband in the most lucrative (metro) markets. By now most of the basic fixed broadband products are superior to the installed wireless products, while the fixed products have evolved to ADSL2+ etc. The gap has increased as no progress has been made in the commercialisation of mass market WiMAX. While the WiMAX technology already could deliver better services it doesn’t have the mass market scale to support a more rapid upgrade to these new advances.
As a consequence the challengers who launched pre-WiMAX networks failed to grab sufficient market share to build sustainable businesses. There are examples of this in New Zealand (Woosh), Australia (Unwired) and Korea (WiBro) as well as in many other countries.
Opportunities in regional niche markets
The situation is quite different in markets where there is very little or no competition from fixed networks. The regional markets that don’t attract the attention of the fixed network providers, and that are unlikely to see such competition in the next five years or so, offer an opportunity for WiMAX. While mobile broadband services might also reach these areas, the costs associated with WiMAX are significantly lower and therefore offer a commercial fixed-wireless opportunity.
BuddeComm estimates that, if deployed swiftly, WiMAX could grab a 25% share in these markets in that five year period. However, wireless would be pushed back to a 10%-15% share of the total broadband market (premises), over a 5-10 year period, as fixed fibre networks will creep further and further into the market. But, as we all know, those who are able to grab the first market penetration will be in an excellent position to hold onto these customers, and to migrate them, over time, to other networks.
However, if WiMAX again will see further delays, that 5 years window is decreasing.
Another successful niche market for WiMAX is the enterprise segment, and in particular campus networks. Here it has been shown that a total wireless solution for a 5,000 user site would only costs 20% of a fixed network roll out. While the industry claims that wireless only networks are more secure and more reliable than fixed networks there are still only a few large scale customers in the world who are willing to go for such a wireless-only solution.
Furthermore WiFi is a very successful application in home networks and WiMAX could follow its little bother into that direction as well.
Alternative to mobile broadband - Failed
When WiMAX started to lose its potential as an alternative to fixed broadband, the industry began talking about personal broadband, basically as a much more data-focussed wireless broadband product for the mobile market. There was nothing wrong with that vision but there was no execution.
The same story unfolded there – delay after delay allowed the incumbent mobile industry to come up with its own wireless broadband products (3G/HSPA). There are still no commercial mass market mobility WiMAX products available and it could easily be 2009 before anything starts to move in that direction – by which time the mobile operators will themselves have more than enough wireless broadband penetration to fend off any potential WiMAX competition.
It would be a very brave challenger who would take on these mobile operators by building large-scale WiMAX networks to compete with these incumbents.
Given what we know now, WiMAX doesn’t offer any great advantages over the next generation of mobile broadband LTE. With the mobile operators firmly in control of this market there is little or no chance for WiMAX to make any serious inroads into this market. Again, it is a story of too little, too late.
True there will always be a few exceptions where there might be successful large scale deployments and the WiMAX advocates are talking about the Sprint roll out in the USA and developments in Japan and Korea, but I have learnt to wait on results rather than trusting the hype.
WiMAX remains a niche market product
So where does this leave WiMAX?
Certainly, as indicated above, there are some good fixed wireless opportunities in regional markets.
In the mobility market BuddeComm envisages that there will be no new opportunities for WiMAX until we start seeing structural changes in the mobile industry. In a different structurally changed industry the infrastructure operators will look at new revenue opportunities and WiMAX might be able to deliver in some cases interesting applications more cheaply and efficiently than some of the mobile technologies. By offering dual or triple infrastructure technology (LTE + WiMAX + WiFi) services and applications developers would be encouraged to develop innovative new products, utilising the specifics of each of these technologies, and develop these applications around the specific benefits that each of these technologies have to offer.
In such an environment the focus would shift from access to applications (as currently is slowly starting to happen with the fixed network) and we will see innovative products being developed around applications like video, music, games, communications, healthcare, education, business, and within business financial, logistics, transport, manufacturing, etc.
The reality is that these will all be niche market applications and it will be the niche market providers and consumer electronic companies who can best service these customers – not the telco or mobile operators.
We are talking now around 2012-2015, and who knows what the technological developments will be at that time? Will there still be room for WiMAX, or will it again be a case of too little, too late?
Or will both LTE and WiMAX in the meantime have been surpassed by yet another technology?
Paul Budde
