A new report from telecoms IT and media research company Analysys argues that while early business cases from the WiMAX community show attractive financial returns in a variety of deployment environments, modelling with more realistic assumptions indicates that there may be very few situations in which WiMAX has a secure long-term business case.

According to Alastair Brydon, co-author of the appropriately titled ‘The Business Case for WiMAX’ report: “WiMAX operators and investors will have to select their targets with extreme care. Small returns in many situations, from low ARPU or take-up, make high up-front investments in network infrastructure, marketing and customer premises equipment highly risky.”

Other takeaways from the Analsys research are:

·         Although emerging countries have low penetration of fixed network infrastructure and services, the business case for WiMAX will still be difficult. Low disposable incomes, low penetration of PCs and the growing strength of cellular services will limit the return.
·         In principle, there is an opportunity to make a healthy profit from WiMAX in rural areas of developed markets, unserved by DSL or cable services. However, with fixed operators rapidly extending the reach of DSL, these opportunities are likely to be few in number and limited in size.
·         Head-to-head competition with fixed broadband services in developed markets would require a spectacular performance by a WiMAX operator to overcome the growing capabilities and services on offer, such as IPTV. WiMAX would encounter fierce competition from DSL services offered by a wide array of major consumer brands using their own networks, wholesale services and local loop unbundling (LLUB).

Considerations such as these last two may have played a part in Deutsche Telekom’s decision last week to pull out of the future German WiMAX business and not participate in next month’s WiMAX spectrum auction. Reports say that while the German incumbent found the technology ‘interesting’ after conducting technical trials, WiMAX didn’t cut the mustard when measured against current and future possible wireline alternatives.
John Williamson