Who needs WiMAX voice?

At first glance, easy-to-use and ‘carrier grade’ VoIP looks like it could be a compelling part of the service proposition from WiMAX new entrants and a definite boost to the business case, particularly for those with no ‘legacy’ voice revenues to protect.

Assuming that all the technical challenges of delivering a carrier-grade telephony service over WiMAX (and handovers with other networks) can be overcome, the regulators allow it, and there is a wide range of attractively-priced handheld devices on the market – some pretty big assumptions here, I know – there’s a strong argument to be made that WiMAX new entrants would be much better equipped to compete in the broadband marketplace.

Moreover, as developed and emerging markets get dragged further into an economic downturn, it becomes more unlikely that consumers are willing to splash out on two devices – one primarily for voice (the mobile phone) and another for higher-speed data and the mobile internet (WiMAX). Better to have voice and a very good mobile internet experience as part of the one package, competitively priced. This would play into the hands of the WiMAX camp, especially if the technology’s economies of scale were to ramp up and new entrants could keep their costs down to protect margins in a competitively-priced environment.

But for all that, it seems premature to talk about VoIP over WiMAX as key. This is not just because of a general lack of handheld device availability and, arguably, immature technology, but it seems to make more sense for WiMAX new entrants to emphasise what they can do better than existing broadband players (and voice is probably not one of them).

And a market position that foregrounds voice, even if WiMAX players could offer it cost-efficiently and with decent QoS, could obscure that differentiation. WiMAX VoIP suppliers would also need to convince operators that voice wouldn’t chew up so much of their spectrum allocation that it would adversely affect data performance.

Meanwhile, more and more mobile operators are beginning to embrace VoIP and the price of cellular voice minutes, due to a mix of competition and regulation, is falling sharply in many markets. It would be hard, in most cases, for WiMAX players to compete on voice.

On the flip side of this argument, new WiMAX entrants that don’t offer a voice service with some basic quality of service guarantee (and this includes Xohm), face the difficult task of establishing what is pretty much a new mobile internet/data market from scratch. These WiMAX players are looking to sign up customers who, presumably, will need to hang on to their cellular contracts to maintain wide area voice coverage. This looks a tough thing to do at the best of times, and even tougher if more and more consumers are now looking for ways to reduce their spending.

Even so, low-priced WiMAX notebooks and dongles – as well as embedded-laptops and MIDs (mobile internet devices) – still look the most promising way to kick-start the mobile and nomadic markets through competitively priced data packages. It looks the strongest WiMAX market differentiator.

In all likelihood, VoIP will only become more important to WiMAX if the mobile internet/data market struggles to take off, or if VoIP can be used to create new and compelling multimedia applications. What these new and compelling multimedia applications would be, however, I’m still not sure.