Fixed Market Trends
The fixed/portable broadband wireless equipment market (sub-11GHz)
has grown from a $430 million (USD) market to $562 million, a 30%
increase. Maravedis predicts the fixed broadband wireless market
to pass the $ 2 billion mark by 2010.
For the first time in its history, vendors including Airspan and
Alvarion have made yet modest but positive cash flows. Further
broadband wireless has evolved from an obscure acronym to the next
big thing thanks to Intel's marketing machine and the formidable
progress made by the WiMAX forum, growing membership to the extent
that WiMAX is now synonymous with broadband wireless.
Maravedis has been following the industry long enough not to fall
into the trap of using WiMAX as representing the whole story.
WiMAX is an important, highly visible part of the evolving
fixed/portable field but not all of it! Other technologies
including DOCSISbase, TD-CDMA and 802.20 merit to be analyzed as
The fundamentals for continued growth remain sound. Broadband is
becoming a necessity for many residential and business subscribers
worldwide. There were close to 130 million broadband subscribers
worldwide at the end of 2004, a 30% growth from 2003.
Although DSL and Cable are poised to remain the dominant
technologies for access in urban and developed areas, pre-standard
wireless access technologies are already becoming reliable and
cost effective complements or alternatives to providing voice and
Some Key Findings include:
Some 785,000 broadband CPEs and over
40,000 base station sectors were
shipped in 2004;
Alvarion remains the market leader
with 26% market share followed by
Motorola Canopy and IP Wireless;
EMEA which represented 32% of the
overall 2004 equipment sales continues
to represent the largest market opportunity but Asia will
outpace it by 2007;
The carriers market segment with 68%
of all sales represented the largest
segment followed by Wireless ISPs and Public entities;
The access and backhaul applications
represented respectively 81% and 19%
of total sales in2004. However backhaul will represent 27% of
sales by 2010;
3.5GHz, the most allocated frequency
band for BWA, represents the largest
opportunity for BWA with over 40% of total sales followed by the
5.2-5.8Ghz band. We believe those bands will continue to
sales especially in light of the fact that they are two of the
initial WiMAX profiles.
The 2.3 and 2.5-2.7Ghz market share will grow as Korean (WiBro)
operators start deploying WiMAX equipment some time in
The shipments of proprietary Fixed
Indoor/Portable equipment already
accounted for 21% of 2004 sales;
Shipments of OFDM based product
already represents 18% of all shipments
and that proportion will grow with the adoption of 802.16-2004
to 60% by 2008.
Service Provider Trends
|Maravedis estimates that close to 1 million subscribers worldwide
had some form of fixed broadband (+256Kbps bi-directional)
wireless access. Maravedis estimates total service revenues in
2004 to be US$1.4 billion.
In developing countries, representing most of the worldwide
population, the potential for BWA/WiMAX growth is most pronounced.
In rural areas, governments at all levels are driving the growth
of broadband wireless through continuing frequency allocation and
subsidies to make the rural business case more attractive in order
to reduce the digital divide. Our research indicates that a
tipping point that will drive increased unit demand is likely to
occur due to effects of standardization: commoditized IC/SoCs will
help drive the price equation, stimulate increased awareness and
market driven demand, and provide increased supply stability and
compatibility across similar equipment profiles.
This year, operators will explore the challenge of growing
broadband ARPU. There will not be a single solution: faster speeds
and VoIP will work for some; content and IPTV services for others.
There will be a growth in commercial bundles driven by telcos'
responses to cable operators' triple play services. We expect VoIP
services to continue to show strong growth and continuing
acceleration in subscriber base in both the consumer and
Maravedis surveyed operators to understand their greatest
expectations vis a vis upcoming WiMAX equipment. The results of
the survey are presented in the report. In essence, the number one
expectation for service providers is lower CPE equipment cost,
ideally in the sub $300 range. This is not a surprise when
considering the impact of CPE subsidies in the total business
case. The second highest priority expressed is for base stations
to deliver more throughput, a response that came ahead of benefits
such as Interoperability, ease of installation or coverage.
Responses changed noticeably depending on service class: business
or residential customers.
We also looked at BWA operators strategy towards mobility. The
majority of service providers are excited about the prospects of
mobility but concerns about regulation and network complexity
alter the excitement.
Whether it is 3 G or 802.16 e,/WiBro the success of mobile
broadband will be driven by the development of user friendly
applications and handsets. In this section, Maravedis provides an
overview of what are the applications driving the mobile broadband
market including mobile gaming, multimedia messaging, gambling and
other applications such as ring tones. The mobile consumer market
represents the lion's share of mobile data services revenue due to
Spectrum & Regulation Trends
Maravedis spent more than six months directly surveying regulators
in each of the fifty countries reviewed in this section. This
aspect of the research and the construction of a detailed database
reference is by far the most thorough in the industry. Maravedis
fulfills the challenging task to contact, collect and continuously
update its database because many customers have come to depend
upon this resource to determine product development and marketing
Our research indicates that 82% of regulators surveyed allow both
TDD and FDD multiplexing. About 50% of the countries require
3.5MHz channels while the rest is divided between 7 and 14Mhz.
Very few countries impose narrow 1.75MHz channels. In Asia, the
situation is more diverse. For spectrum block sizes, the situation
also varies form region to region and between countries within the
same region. 3.5GHz remains a band allocated mostly for fixed only
services in 77% of the countries surveyed. However the regulators
are starting to revise their positions to allow portable services
in a first step towards allowing full mobility at 3.5GHz. 13% of
countries surveyed have loosened up their requirements for fixed
only services at 3.5GHz. Regulators recognize that the line
distinguishing BWA and 3G is blurring and may converge in the
While most of Europe the band 2.5-2.69 GHz is exclusively reserved
for UMTS mobile services and is therefore not available to BWA/WIMAX
service providers. In other parts of the world, initiatives such
as the ITU WP8F, are pushing to allow interoperability bodies
between UMTS and OFDM in these mobile services.
Beyond the regulation constraints, WiMAX needs lower bands to
economically deploy networks that will provide full mobility.
Higher than 3GHz bands are not suitable for mobile networks as
proper coverage would require too many base stations compared to
sub 1GHz bands. The WiMAX regulatory group is working towards
influencing the regulatory bodies worldwide to open up bands for
WiMAX mobility. Those bands could include the 700 MHz and 450 MHz.
The regulatory working group is also working to create an
environment to support eventual global roaming for nomadic &
mobile WiMAX devices
Solution Vendor Trends
Maravedis has surveyed more than forty BWA/WiMAX system vendors
and larger infrastructure suppliers. During our careful review of
product specifications, we have attempted to get a sense of the
true capabilities of current proprietary broadband wireless and
future WiMAX solutions.
In this study, Maravedis provides its readers with a review of
real life deployments, product specifications, as well as an
in-depth analysis of the strengths and weaknesses of every vendor.
Alvarion, the market leader with 26% market share, may not have
the highest performance system in the market, but it continues to
beat every competitor according to several important business
metrics such as customer base, OEM relationships, installed base,
revenues and financial position. We also came to the conclusion
that proprietary systems will be phased out only gradually and
coexist in hybrid networks with WiMAX certified solutions. Such
solutions will not be implemented commercially until at least Q1
We also provide a dynamic review of continued industry
consolidation and guidance as to who will be around in the next 2
years and why. We look at how 802.16 compliant vendors will
differentiate themselves from one another once the standard is in
place and becomes widely adopted. OEM relationships have become
key for system vendors hoping to grab a share not only of the soon
to be commoditized fixed WiMAX market, but more importantly to
position themselves among large mobile operators who will continue
to shop with their traditional large suppliers.
The whole concept around standardization is to reduce equipment
and component costs through integration and economies of scale
that will, in turn, allow for mass production at lower cost. In
particular, current chipsets are custom-built for each BWA vendor
making equipment development and manufacturing both costly and
With large volumes, chipsets could sell for as little as $25 and
other WiMAX components could benefit from these mass volumes as
well. We expect the cost reduction impact to be mostly on the CPE
at an average selling price close to $100 by 2008. Base station
costs are more complex due to the variety of types and scale.
However base stations are less of a factor in the economic
equation for operator deployments.
A notable initial benefit of WiMAX is to reduce customer confusion
represented by the advent of a WiMAX compliance label. However the
hype generated by the press and vendors has sent an overly
optimistic picture of what WiMAX systems can actually deliver. In
this report we provide an in-depth reality check about what to
expect in the next five years. Both proprietary systems and WiMAX
are aiming at improving the coverage and penetration limitations
of existing systems. The fact is that no system can go beyond the
laws of physics and every deployment will face different
WiBro is being incorporated into the WiMAX standard effort but can
be viewed, for the time being, as a separate market development
centered in South Korea that is valuable because it will be an
early large scale deployment. WiBro will demonstrate the early
capabilities of WiMAX systems for both fixed and mobile broadband
communications that compares favorably for nomadic to mobile
applications of 3.5G-4G cellular. WiBro is likely to change
opinions about the technical credibility and market merits while
dispelling myths perpetrated by some that WiMAX is too late or
offers nothing new. A major problem with the credibility of the
WiMAX camp is that any delay or perceived delay registers as
vaporware and validation to the proposition that WiMAX will not
shape up as a viable competition to existing wireless cellular or
as some new breed of popular wireless broadband phenomena. WiBro
is a central factor in proving that mobile WiMAX is real and is
gaining more sales momentum.
The three operators who have been licensed spectrum by the Korean
government are required to spend at least $1 billion US each on
deployment of WiBro systems. Operators Korea Telecom, SK Telecom
and Hanaro Telecom are required to start offering service in 2006.
These developments and emerging trends make WiBro developments and
harmonization within WiMAX a key area of focus through 2005-2007.
Maravedis provides insights into the plans of major players in the
WiBro initiative and how this is likely to effect markets
The largest markets for wireless broadband will be for mobile
applications. Mobile broadband is being developed from two
opposing directions: From the WiMAX side, systems will become
increasingly mobile as unification takes place under the 802.16
standard. From the cellular mobile side, systems are being driven
to deliver voice, rich media and broadband data over an IP
network. Both streams of development eventually will deliver
similar data rates. However cellular phone/data network sales
currently greatly exceed BWA in terms of both unit numbers and
The trend for WiMAX systems starts with the first stage being for
fixed-nomadic CPEs with systems expected to become WiMAX Certified
starting in the mid-2005. The second stage of WiMAX systems based
on 802.16e will provide greater nomadic followed by PCMCIA enabled
laptop mobility. Maravedis analyses the trends towards greater
mobility within individual IC and equipment companies, within the
standards groups and forums, spectrum and regulatory issues, and
major regional deployments such as WiBro. The exciting stages of
growth of WiMAX are fueled by fundamental shifts in underlying
wireless technology, global shifts in market demand, and political
and corporate aspirations to take part in a less fettered,
standards based 3.5G-4G wireless platform.
Maravedis does not expect WiMAX to become a 3G killer in the near
future. WiMAX provides a framework for 4G mobile, more squarely
pitted in the mobile market arena against 3GPP rev.7 than against
either current 1x EV-DO/EV-DV or soon to roll out HSDPA.
For future considerations as the road maps of the two camps
unfurl, WiMAX and 3GPP will overlap and contend for common mobile
broadband ground, each with distinct market and technology
development orientations but less distance that separating them.
Qualcomm and other vested interests in cellular fields contend,
WiMAX is either too late or unnecessary. Competitive approaches
should be recognized realistically and welcomed by implementers
and users, particularly those that fit global patterns of economic
and political expression. These major trends and others lead to
both a conflicted and exciting future for wireless developments.
Maravedis spent time to build fundamental data through extensive
interviews, fact gathering and analysis of legacy proprietary,
fixed Point to Point infrastructure and the emerging field of
802.16/WiMAX technologies and trends because these fields are new
or less understood and will have influence on converging markets.
We also present the fields of legacy and emerging 3GPP mobile
systems and road maps because this also defines a major adversary
and direction in which the emerging field of technology is headed.
Key Findings include:
Both 3GPP and WiMAX technological
road maps converge by 2010 on similar bandwidth and mobility
Large scale cellular deployments of
both WiMAX and 3GPP systems will converge within a framework of
IMS (IP Multimedia Subsystem) network architecture. Other
standards such as for common base station structure and seamless
roaming between wireless systems and wired networks also are
driven toward the direction of IP/Ethernet protocols which will
become common to both WiMAX and 3GPP.
802.16e/WiMAXm (WiMAX Mobile
versions) is a highly scaleable, modular and cellular, all
IP/Ethernet protocol wireless communications system. Although
early WiMAX will only be fixed to nomadic, the road map calls
for rapid progression to CPE, device assisted laptop, and within
30 months to true mobile capability.
The highest growth in both mobile
cellular and pre-WiMAX systems deployments is now occurring in
developing markets and similar under-served economies. These
markets are more prone to adopt new technologies that are more
open to localized participation or more expedient to fulfilling
market needs efficiently.
Intel has a vital role to play in
development of WiMAX as both an extension to wired Ethernet
networks and as a driver into a broader role in mobile wireless.
Intel has both the process and design technologies and
manufacturing might that argues in favor of their increased
participation in an expanded, converged wireless broadband
Chipset Vendor Trends
The whole industry is benefiting from the entry into the market of
Intel which is behind most of the publicity around WiMAX. Intel
has signed partnerships with the most important traditional BWA
players but those deals are not a guarantee of future purchase
orders, as evidenced by the announcement of multiple chipset
suppliers to the same system vendors such as Airspan. On the CPE
side however, we believe that Intel will dominate the market.
However other chipset makers such as Wavesat and Sequans or
Picochip have made their footprint with base station and/or CPE
solutions. The market for 802.16 chipsets should pass the one
million-unit mark per year in 2007- 2008 while 802.16e chipsets
will be introduced in late 2007 and will grow exponentially
Traditional Point to Point Analysis
Point-to-point (PTP) microwave communications is an industry with
deep roots and still constitutes a far larger industry than any
other segment of broadband wireless with current sales approaching
the $4 billion mark worldwide and projected to reach approximately
$6 billion before the end of the decade. Backhaul itself accounts
for roughly 70% of overall sales within the PTP category today. We
expect that figure to increase to 80% within five years. In the
future we see PTP microwave losing ground to both PMP/WiMAX and to
Market Size Forecasts
We believe the BWA market will finally pass the billion dollars
psychological mark in 2007 using a CAGR of 45% for CPEs and 25%
for base stations revenues. This is a realistic expectation in
light of the historical industry overall CAGR in 1999-2004 of 50%.
This report provides market forecasts in units and $ for the
2005-2010 period for both CPEs and base stations, fixed and mobile
systems as well as numerous breakdowns.
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