Intel has been in the news this week regarding its WiMAX investment intentions surrounding India. It seems highly likely, according to local reports, that the WiMAX cheerleader will make an investment in at least one Indian operator.

Ken Wieland, Contributing Editor

November 25, 2008

3 Min Read
Can WiMAX rise to the developed market challenge?

Intel has been in the news this week regarding its WiMAX investment intentions surrounding India. It seems highly likely, according to local reports, that the WiMAX cheerleader will make an investment in at least one Indian operator.

With Indian BWA (broadband wireless access) licences scheduled to be auctioned in the standardised WiMAX frequency bands of 2.3GHz and 2.5GHz in January 2009, Intel investment In a BWA licence winner would be a clear boost to WiMAX prospects in what is probably the biggest developing market opportunity in the world for 802.16e and 802.16d technologies.

But while the business case for WiMAX in emerging markets is comparatively easy to understand, particularly where fixed-line infrastructure is either patchy or non-existent, WiMAX supporters typically have to work a lot harder to convince sceptics there is a business case to be had in so-called developed markets, where broadband penetration levels (fixed and mobile) are already high.

Even so, Intel Capital, the investment arm of Intel, has placed large bets on WiMAX making it in some of the world’s most highly competitive broadband markets. Aside from the new Clearwire joint venture in the US, in which Intel Capital has invested $1bn, the US chip giant has WiMAX operator stakes in the UK (Freedom4), the Netherlands (Worldmax) and Japan (UQ Communications). And in May 2008, Intel Capital made a successful $26.5m bid for a 50MHz chunk of TDD spectrum in Sweden’s 2.6GHz auction.

If WiMAX is to succeed in these markets, it obviously needs to offer compelling differentiators. An obvious one would be higher speeds and better reliability than best-effort 3G/3.5G networks for nomadic and mobile use. Another one would be transparent and easy-to-understand data packages – with some carefully thought out ‘unlimited’ data usage offers – as well as easy and quick installation times for the end-user.

And if extensive network coverage is available when a range of WiMAX-embedded laptops and notebooks/netbooks come onto the market next year and 2010 (largely through the chipset efforts of Intel it has to be said) than WiMAX operators would have a ready-made customer base without having to worry about PC hardware. Large numbers of consumer and business users (hopefully) will be upgrading their laptops anyway over the next few years, and more and more of these devices will have WiMAX embedded into them as a standard feature.

From speaking to WiMAX operators in developed markets, I am always impressed when they say they can break even, operationally, with quite a low penetration rate. Worldmax in the Netherlands, for example, says it only needs to have a household penetration of 3-5 percent to break even. Freedom4 in the UK says it needs just a five percent share of its addressable market (SMEs) to achieve the same feat.

Of course, I’ll be even more impressed if this turns out to be true. That would go a long way to giving substance to the lower operational cost claims made by suppliers of an all-IP ‘flat’ WiMAX architecture compared with ‘legacy’ networks.

But there’s no use in pretending that WiMAX operators will find it easy in developed markets. For Worldmax, which has a strong consumer focus, one of its main gripes is a lack of device variety for its mobile WiMAX network at 3.5GHz, which entered commercial service in Amsterdam in June 2008. “We are happy with the devices we currently have, but we are less satisfied with the speed new devices are becoming available. We would like to see more,” Worldmax CEO, Jeanine van der Vlist, told WiMAX Vision.

If WIMAX operators could make their desired impact in highly competitive markets, however, it would force a rethink of the prevailing view held by many industry observers that the best chance for WiMAX success lies only in developing economies. To paraphrase a famous Frank Sinatra song, if WiMAX can make it in the Netherlands (or the UK, or Japan, or the US) it can make it anywhere.

Provided, of course, they have enough spectrum to play with.

Read more about:

Discussion

About the Author(s)

You May Also Like