Has WiMAX got it covered?

Will the extent of WiMAX coverage be a major factor in subscribers’ decision-making process about whether or not to opt for the service? It certainly was a big factor in the take-up 3G in its early days (along with a lack of device variety) so it might seem reasonable to conclude that WiMAX will have to wrestle with similar coverage issues. Without nationwide, or near nationwide coverage, one might be tempted to think that mobile WiMAX will similarly struggle.

This line of argument would have more force if WiMAX plays were focusing just as much on voice as they are on data, where nationwide reach is obviously desirable. With data-centric services, such as internet browsing, citywide or localised coverage will probably be sufficient for most users.

It’s certainly the view of Intel and Clearwire, although cynics might argue they have little choice but to adopt this position as anything close to WiMAX nationwide coverage in the US is not on the cards for the next few years at least.

Yet there appears to be some evidence that the city-by-city approach, rather than broader coverage, can work for fixed and nomadic wireless broadband services. Clearwire reports that in the bulk of is ‘pre-WIMAX’ markets it has managed to achieve EBITDA positive results, even though there are no nationwide roaming facilities. This augurs well, says Clearwire, for mobile WiMAX.

Being able to build successful business cases on relatively small WiMAX rollouts will be vital if WiMAX is to gain momentum, particularly during the economic downturn when raising enough money for nationwide rollout will not be possible in most cases. Better to prove the business case on a case-by-case basis, which, in turn, makes fundraising easier for any bigger rollouts further down the line.

UQ Communications in Japan appears to be an exception to this type of thinking, however, as it is prioritising nationwide mobile WiMAX coverage. By 2012, UQ is aiming to cover more than 90 percent of Japan’s population, although it says it will remain focused on data services rather than voice. Bearing in mind that the single biggest investor in UQ is mobile operator KDDI, it is clear why the WiMAX operator is holding back on voice.

But even if most users don’t need nationwide coverage, it is still reassuring to have it. The question is, how far will dual-mode cellular/WiMAX devices fulfil that need? It will be a harder sell for WIMAX, particularly in the economic downturn, to expect customers to hold on to their cellular subscription while also paying extra for ‘personal broadband’ services.