Many Wimax operators, especially small players, have focused their service offering on the SME and business segment, mainly because the cost associated with the fixed CPEs is still too high to be affordable for the mass consumer market. Networks have been dominated so far by standalone CPEs as well as PC peripherals such as USB dongles and PC cards. Embedded multimode devices are only emerging in the last few months by operators such as Scartel, which is using an HTC device.
Challenges ahead
Although the top Wimax operators enjoy the support of strong investor groups and deep pockets to offset the limited credit facilities, they are still impacted by the economic crisis. Some operators are feeling pressure from not having the right spectrum or sufficient spectrum to achieve their deployment plans.
They have been forced to delay their roll-outs as they are hoping to obtain additional spectrum assets either by allocation from the regulator or by acquisition or transfer from other license holders.
We expect three trends to shape the next few quarters:
- During 2009-2010 Wimax will face a strong economic headwind, but its image as a more efficient, lower cost network, along with the availability of more mobile devices, will help build momentum in terms of deployments. Wimax capex investments will slow down among the many greenfield operators that have limited access to credit, including the majority of operators in the 3.5-GHz band. They will reign in their focus on the most profitable portion of the market - business customers looking for reliable connectivity.
- Emerging and underserved markets will be a central theme for growth of Wimax despite financial constraints, since several projects have been funded and are viewed as an economic benefit. Many vendors consider Latin America and Asia as the most attractive regions. BRIC countries will have a greater influence on how Wimax is seen as a next-generation alternative in competition with LTE outside the US.
- In the context of the deteriorating US economy, we expect Clearwire to take a cautious approach to its network deployment regardless of time to market entry advantage. We also believe that the economy and continued high price sensitivity will drive adoption of the flat-rate and flexible Clearwire 'pay-as-you-go' price model. Still too early to predict are the impacts of groundbreaking efforts including: the availability of Google's G2 Wimax phone; Comcast's femtocell marketing, which will begin in the second half of the year; an orchestrated virtual network operator push in enterprise and vertical markets; and the availability of the first 'full mobile' devices by the fourth quarter. These ingredients may spice up the so far lackluster performance of Clearwire's Wimax rollouts.
Adlane Fellah is a the senior analyst with Maravedis, a research and analysis firm focusing on BWA technologies including Wimax, UMB, LTE and UMB. www.maravedis-bwa.com