WiMAX: A tale of two markets

WiMAX technology offers great promise to deliver high-speed broadband Internet access with DSL-type performance and price, as well as facilitate the supply of low-price customer premises equipment. Unfortunately, this promise is not yet fulfilled, and WiMAX network deployments have been plagued with delays related to technical and performance issues, as well as insufficient ranges of CPEs.

These delays have created opportunities for other technologies to catch up with WiMAX — notably high-speed packet access (HSPA) services added to 3G networks. The delays also have enabled the other 4G-like technology, long-term evolution (LTE), to become front-of-mind for existing 3G operators because the technology is now seen to be sufficiently developed for 3G operators to include it in their five-year strategic plans — sometimes in place of WiMAX.

However, there is good news for WiMAX. Sprint, long regarded as the bellwether for WiMAX network deployment and service introduction in the U.S., finally launched its WiMAX service in Baltimore in September. The service is called Xohm, and initial service offerings are priced starting at $25 per month. There are a number of sub-$100 CPEs available, and various laptops with embedded WiMAX modems can be purchased. From a technology perspective, the Xohm launch represents a coming of age of WiMAX. The next phase will prove whether the economics of the business case hold up.

Regarding the business case, analysis suggests that two distinct types of market situations are developing for WiMAX and wireless broadband in general.

Emerging markets are typically in countries where there is a pent-up demand for basic broadband and voice services in underserved markets. These services require mostly fixed wireless types of access. Window-mounted or externally mounted antennas/CPEs will be adequate. This greatly enhances coverage per cell site and has a large, positive impact on business-case economics.

Mature markets are typically prevalent where well-developed fixed and wireless network infrastructures are present. Typical demands are for services that are anytime, anywhere; have high point-of-presence traffic; and require full mobility and deep in-building penetration. These requirements result in very different price points for services and much greater demands on coverage, resulting in higher costs.

The business-case economics ultimately will determine the success and penetration of each type of wireless technology. Foremost for any wireless technology is the cost of coverage; the incremental cost of capacity will be added to this cost as the number of users increases. The basic services for emerging markets result in adequate coverage with considerably less cell sites than for mature market services. For example, a gain of just 3 dB in the link budget will reduce coverage costs typically by 30%, according to Signals Research Group.

The less-stringent coverage requirements for emerging markets suggest that there may be an overall better business case for greenfield technology deployments such as WiMAX. This may yet result in WiMAX being deployed primarily in these markets, while the mature markets develop mostly through existing mobile networks via HSPA and, ultimately, LTE.

John Barton is managing partner of Santiva, an international sales and marketing firm serving the communications industry.