Real opportunity for WiMAX lies in emerging markets

WiMAX suffered a major setback when the partnership between US operator Sprint Nextel, one of the technology's strongest advocates, and wireless high-speed Internet service provider Clearwire fell apart in November 2007. Now a new frontrunner has emerged with ambitious plans that may strengthen the case for WiMAX.

Indian telecoms operator Tata announced plans earlier this month to invest US$500 million over the next three years to deploy one of the world's largest WiMAX networks. It aims to offer broadband services to businesses in 110 Indian cities and residential services in 15 cities by the end of 2008, and has a target of 200,000 residential subscribers by March 2009.

In developed countries, WiMAX occupies a niche position because it has been unable to compete with existing fixed infrastructure and established providers. At the other end of the scale, in certain developing countries WiMAX has been used to provide broadband access to large cities. However, economic constraints in other areas in the developing countries may preclude more widespread adoption. The real opportunity for WiMAX lies in emerging markets.

India has experienced significant economic growth in the last 15 years, particularly in sectors such as pharmaceuticals, biotechnology, nanotechnology and telecoms. The largest cities in the country are served by legacy fixed infrastructure but outside these major economic centres the quality of infrastructure deteriorates rapidly. At December 2007, broadband penetration in India stood at only 0.3% of the population. Increasingly, India will find herself facing a bottleneck where improvements in infrastructure will be required to allow the economic expansion to spread beyond the first-tier cities.

For Analysys WiMAX is well-positioned to meet the latent demand. The technology offers high data speeds and good indoor coverage, and can be rolled out rapidly and more cost effectively than its fixed counterparts. Tata is further accelerating deployment, and making significant cost savings, by mounting WiMAX base stations on mobile masts owned by its sister company, mobile operator Tata Teleservices (Maharashtra). Tata's plan is for broad network deployment and is therefore moving quickly.

And yet Tata is not the only operator in India with ambitious plans. Indian incumbent BSNL announced plans in November 2007 to spend US$750 million on a nationwide WiMAX network that will primarily target smaller towns and rural areas. Reliance Communications (RCOM) launched WiMAX in June 2007 in the cities of Pune and Bangalore, and has subsequently been expanding its network to other cities. Operators in India are currently licensed to use the 3.3GHz band for fixed WiMAX operations. Further opportunities could emerge with the proposed allocation of three licences providing a total of 60MHz of spectrum at 2.5GHz, although the details of the auction have yet to be announced. For existing operators, spectrum in this band would provide extra capacity as well as better propagation characteristics (and hence lower roll-out costs). The provision of mobile WiMAX services may also be an option in future but this depends on the outcome of regulation on mobility.

WiMAX is being deployed in an increasing number of countries. 115 networks were in active service worldwide at February 2008 and a further 83 networks were being deployed, according to Analysys Research's WiMAX Tracker. That said, most deployments to date have been relatively small. In contrast, India's recent announcements herald not just large-scale deployments but the promise of a large user base. A vote of confidence for WiMAX indeed.

More info:

• http://www.analysys.com/