WiMAX to remain 'niche,' says analyst

Stephen Withers
Monday, 12 October 2009 08:31

Business IT - Technology

WiMAX is destined to remain a niche technology, even in emerging markets. That's the judgement of a major analyst firm.

Analyst firm Ovum reckons that hopes of WiMAX gaining large-scale adoption in emerging markets won't be borne out.

Although two-thirds of the world's WiMAX networks are in emerging markets, Ovum reckons they have only attracted one tenth - or even as little as one hundredth - of the subscribers expected by this stage.

Ovum practice leader Angel Dobardziev highlights Scartel (Russia) as the first emerging market operator to reach 100,000 subscribers, followerd by Malaysia's Packet One with 80,000.

"Most emerging market WiMAX players are behind their initial rollout and subscriber targets. The global financial crisis has also made access to finance difficult for greenfield WiMAX players," Ovum officials stated.

The problem, according to Dobardziev, is that WiMAX is not competitive with fixed or other mobile broadband technologies in most urban areas of emerging markets in terms of coverage or price.

"On a non-subsidised basis, it is currently priced and positioned as a broadband option only for businesses or wealthy consumers," said Dobardziev.

"The cost of customer equipment remains the key stumbling block for WiMAX operators, where both DSL and HSPA outperform WiMAX with significantly greater economies of scale," he added.

DSL and HSPA/EV-DO will remain cost and price competitive with WiMAX for the next five years, according to Ovum's analysis. According to Dobardziev, "coverage and cost issues will result in WiMAX appealing only to a relatively small user base of wealthy consumers and SMEs based in urban areas. This is a small and intensely competitive customer segment in every market."

Ovum predicts large-scale consolidation of WiMAX operators, including their acquisition by other fixed or mobile providers, and that the technology will remain niche: "We forecast that WiMAX will account for less than 5% of the 1.5 billion fixed and mobile broadband access connections in the emerging markets by 2014," said Dobardziev.

(Ovum's definition of 'emerging markets' for this purpose is Africa, Asia Pacific [excluding Australia, Hong Kong, Japan, Korea, New Zealand, Taiwan and Singapore], Eastern Europe [excluding Czech Republic, Slovakia and Slovenia], South and Central America, and the Middle East.)