WiMAX: Relegated to Niche Status?

That WiMAX (News - Alert) has struggled to establish a foothold in the mature broadband markets of Europe, North America and Asia is probably too well-known to need a rehash here, and a recent study explores the question of whether there might even be a chance for WiMAX in the emerging markets.


In Ovum's (News - Alert) recent report "WiMAX in emerging markets: the opportunity assessed," Ovum finds that "the confluence of several factors including technology cost, coverage, vendor support and service provider choices will limit WiMAX to only a niche technology in the emerging markets."

Seeing so many reports whose sunny outlooks aren't always equally merited by the actual research, it's refreshing for First Coffee to see a report examine an issue and say you know, this might not work out the way you want. Adds a bit of credibility, you know?

Basically Ovum sees WiMAX's meal ticket as being part of established fixed and mobile operators' broader broadband access portfolios, never the main course.

Angel Dobardziev, Ovum's Practice Leader, stresses that there will be lots of WiMAX networks, however low the uptake: "Two thirds of the 300+ WiMAX networks globally are in the emerging markets of Africa, Asia, Eastern Europe, Middle East and Latin America," she points out.

Dobardziev says WiMAX will remain a niche broadband technology in emerging markets -- "we forecast that WiMAX will account for less than five percent of the 1.5 billion fixed and mobile broadband access connections in emerging markets by 2014."

In August TMC commentator Carl Ford noted that "recent news articles have suggested, again, that WiMAX is dead. The basis of the analysis seems to be tilted in favor of LTE (News - Alert) in many ways."

The stubborn fact remains that emerging market WiMAX operators still count their subscribers in thousands, or tens of thousands, rather than the hundreds of thousands they planned to have at this stage. Scartel in Russia is the first WiMAX operator in the emerging markets to even hit 100,000 subscribers, and second place, Packet One (News - Alert) in Malaysia, has but 80,000.

Why is this? Dobardziev suggests that WiMAX is not competitive against fixed or mobile broadband alternatives in most urban areas of emerging markets  -- where virtually all existing WiMAX rollouts are -- on either coverage or price.

It's certainly not a mass market-affordable technology either: "On a non-subsidised basis, it is currently priced and positioned as a broadband option only for businesses or wealthy consumers," Dobardziev says, citing the cost of customer equipment "where both DSL and HSPA outperform WiMAX with significantly greater economies of scale."

Ovum expects the growth, funding and margins pressures to lead to large-scale consolidation among WiMAX service providers in the next two to three years as well.