After years of speculation, mobile WiMAX has finally become a viable option for network operators offering high-speed data services. While some operators have begun to deploy the technology in recent months, the lack of voice services will likely hamper mobile WiMAX's short-term appeal. In addition, a few key longer-term questions remain.
For example, how will operators offer mobile WiMAX-based data services within the context of mobile voice technologies‾ Also, to what extent will network operators in developing and rural markets succeed in capturing market share by replacing fixed-line applications, such as DSL, with WiMAX-based services‾
Clearly, mobile WiMAX has the lead in being first-to-market with the next generation of products using mobile radio technology based on Orthogonal Frequency Division Multiple Access (OFDMA). However, two other competitive technologies, also based on OFDMA, will likely challenge WiMAX's leadership position in the coming years. One of these technologies is 3G Long-term Evolution (LTE), which seems likely to pick up the reins of radio technology from GSM/W-CDMA/HSPA. Fortunately for those operators that have adopted mobile WiMAX, LTE-based products likely will not be released until 2010 at the earliest, except possibly in Japan.
Another technology that most likely will use OFDMA is Revision C to the CDMA 1X-EV-DO standard. The Revision C standard, recently renamed Ultra Mobile Broadband (UMB), is scheduled to be published in April 2007 and have commercial availability in early 2009; this schedule also affords mobile WiMax a few years of lead-time.
Longer term, it remains to be seen whether the wireless industry can support these three mobile technology ecosystems. Today, one mobile ecosystem, GSM/W-CDMA, accounts for about 95% of net additions, up from 75% three years ago. With this dominant subscriber base, it seems likely that GSM/W-CDMA's successor (3G LTE) will give mobile WiMAX its strongest competition in the future.
Mobile WiMAX essentially must start from the beginning as a technology and ecosystem, and much of its success in capturing subscribers in the future will depend on how operators that deploy it are able to redefine the mobile services market. Some approaches these vendors may take could include focusing on rich media and data applications rather than attempting to compete head-to-head against traditional mobile services and business models.
Despite these various challenges, some network operators have already had some success in developed markets with the technology. The WiMAX market received a large boost in August 2006 when Sprint announced it would allocate approximately $800 million in 2007 and between $1.5 and $2 billion in 2008 on capital spending related to WiMAX in the US. Sprint announced that Motorola, Nokia and Samsung would provide infrastructure and client equipment. Dell'Oro expects that service providers (including Sprint) in developed regions will earn WiMAX revenues from a monthly service fee plus sales of associated content and applications. We have assumed that WiMAX-based voice services will not generate a material amount of revenue for service providers in the short term.
Korea has been a key early adopter of mobile WiMax technology in the form of WiBro. WiBro services are offered in urban 'hot zones' as a complement to existing mobile high-speed data services. Service providers in Korea will be among the first to determine how a WiMAX-type service can integrate with, or complement, a 3G-type voice and data service based on CDMA and W-CDMA. Moreover, fixed versions of WiMAX and other fixed wireless broadband technologies have been serving the broadband access market in developing regions for years, and we expect that 'fixed' broadband access will continue to be an important application for mobile WiMAX. Service providers often find it less expensive to offer broadband services wirelessly, since they need not lay wires to each potential customer. Avoiding this infrastructure cost appeals particularly to service providers in developing regions where customers are often extremely price-sensitive.