The best and worst of times for WiMAX

WiMAX is a tale of two markets – in one, the emerging wireless broadband technology has gained significant momentum in the last year, but in the larger converging broadband market, the runaway success of rival system HSDPA and the acceleration of LTE threatens the opportunity for WiMAX in some markets.

In the past year, the WiMAX industry has passed a string of key milestones including product certification, the launch of services by major operators such as Sprint Nextel, commitments by key internet players such as Google, and the long awaited arrival of WiMAX notebooks and other devices.

The technology is also starting to take off in key emerging markets. “In many major emerging markets all the pieces are falling into place for WiMAX, including availability of spectrum, huge pent-up demand for broadband, certification of Mobile WiMAX equipment, and the arrival of new lower-cost devices such as ultra-portable notebooks and netbooks,” said Mike Roberts, principal analyst at Informa Telecoms & Media.

By way of illustration, the analyst firm forecasts that WiMAX will account for 24 per cent of India’s total broadband subscribers by 2013, up from 7 per cent in 2008.

But despite these successes, WiMAX rival HSDPA has become a runaway success in many markets worldwide, and emerging technology LTE has accelerated and gained the backing of most of the world’s major mobile operators, including Vodafone and China Mobile.

“The converging broadband market has changed dramatically in the last year due to the rise of HSDPA and the acceleration of LTE,” said Roberts. “There’s no doubt that Mobile WiMAX has come of age in the last year with the launch of major new services such as Sprint’s Xohm, but it now faces a tough fight with HSDPA and eventually LTE in key markets. As a result, many WiMAX vendors and operators need to reshape their strategies.”

Korean Mobile WiMAX pioneer KT had 200,000 WiBro subscribers at the end of May, well below expectations given the service launched in June 2006 and was expanded significantly by May 2007. In contrast KT’s mobile arm KTF launched HSDPA services in March 2007 and had 4.8 million subscribers by March 2008.

“KT may be a special case since it launched Mobile WiMAX services so early into such a competitive broadband market,” Roberts said. “But the very different performance of Mobile WiMAX and HSDPA in Korea shows the challenges WiMAX faces in some major developed markets. To overcome the challenges and gain traction in fiercely competitive markets, operators will have to use WiMAX as a platform for innovative new business models, devices, applications and services.”

Mobile WiMAX also faces challenges because it is entering its capital intensive deployment phase in the midst of the global financial crisis, which will make it harder for operators to secure funding for new deployments. “Some operators such as the new Clearwire are already well funded, but for other WiMAX operators still looking for capital it’s a very tough time,” Roberts said. “Of course the credit crisis could also delay investments in rival systems, but HSDPA is already widely deployed and LTE deployments won’t start until 2010.”

However Mobile WiMAX still has a significant head start over its OFDMA rival LTE, which will launch commercially in 2010. “The result is that WiMAX will be the leading next-generation mobile broadband system in 2013, with significantly more subscribers than LTE,” Roberts added.

The bottom line is that WiMAX will take a significant share of the converging broadband market in some regions, but will struggle in others due to competition from HSPA and LTE.