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As regulatory issues, technical
challenges and certification processes begin to be addressed,
WiMAX ecosystems are steadily being built, leading to
deployments that are slowly but surely being realized in both
developed and developing country markets. For the majority of
2006, WiMAX equipment has been shipped and installed mainly
for backhaul purposes and network building efforts. This trend
will certainly continue until 2007 and gather momentum
throughout succeeding years.
However, beyond system deployments that have largely been the
dominant business model in recent years, service provider
strategies and investment funds spent will begin to be
manifested more concretely through the buildup of a WiMAX
subscriber base. Many see 2007 as the tipping point or
inflection point in time for “real” WiMAX growth, and 2007
will be the real test on whether WiMAX does in fact succeed
given the market positioning or hype that has taken place thus
far.
As such, efforts on the supply side via the establishment of
the ecosystem will have to be translated to a sustainable
business model on the demand side. In reality, investments in
many countries around the globe will have to display a
positive ROI model in order to continue or further network
buildout in key countries within and outside of traditional G7
or rich-country markets.
Global WiMAX Service & Equipment Revenues- 2007-2012
Fixed WiMAX services are the first business proposition to be
offered in the marketplace, and there are certainly sound
strategies in terms of price plans and target segments that
have been developed. Digital Divide programs and corporate
access, where terrestrial broadband technologies are either
out of reach or do not justify an ROI model for a network
buildout, present opportunities for fixed WiMAX services.
For broadband wireless services, various business models
create risks but at the same time hold bountiful
opportunities, rewards and revenues. Form factors of devices
ranging from laptop PCs, highly functional cellular phones,
Blackberry-sized devices (with a host of features that include
data, video and voice), as well as the inherent feature of
mobility, create many business propositions that are not
typical of fixed broadband business. More affordable devices,
pre-paid plans and individuals or family units rather than
households or businesses are the addressable market in BWA.
Many end user categories in various niches are thus needed to
develop to create and defend business models.
NSR predicts a healthy market for WiMAX equipment and service
globally. From a combined revenue base of $3.2 billion in
2007, the global WiMAX market should reach close to $49
billion by end-2012. The overall market translates to a
healthy subscriber base as well as a fully developed ecosystem
where form factors and technical capabilities deliver promised
quality that will prove to be compelling for business and
consumer sectors.
The “sweet spot’ of demand within the forecast period rests
with enterprise or corporate applications. The so-called “Road
Warrior” (a highly mobile enterprise user) is expected to
present the largest market opportunities for WiMAX in terms of
the subscriber base. In revenue terms, the corporate base,
which includes fixed and mobile/nomadic users, will garner the
highest revenue streams.
Fixed services are expected to be dominated once again by
corporate use, followed by the SoHo market, and lastly by the
household market. This trend follows NSR’s contention that the
basic and core business sector WiMAX should target rests with
enterprise segments.
Finally, form factors will likewise be important since devices
not only enable the end user to run WiMAX services, but the
devices themselves are expected to lead to WiMAX subscriptions
as end users adopt services based on technology offerings on
the latest platforms. Put more simply, the end user will
likely subscribe to WiMAX services as an after-thought because
he/she wants to primarily own a WiMAX-enabled device.
Primary Research Findings
- WiMAX presents one of largest opportunities for many telecom
players. Backed by industry leaders including Intel, Fujitsu
and Motorola, as well as Sprint and Korea Telecom, WiMAX
operators are looking to serve key applications in both fixed
and mobile/nomadic platforms. One of the early business
propositions is the ability to leverage WiFi services, while
now nearly ubiquitous, but it is still limited by coverage
issues, data rates and security. WiMAX has the ability to
improve on WiFi capabilities from both coverage and throughput
performance levels giving rise to business models such as
serving so-called super-metro zone areas.
- In the 1st Edition of the study, NSR noted the “absence of
long-term commitment from operators,” which was a major
hindrance to full scale WiMAX development. One year later,
this trend looks to be changing given that a number of key
operators such as Sprint in the United States and Korea
Telecom, among others, that are looking at WiMAX as the
precursor or even the very platform to run 4G services. Given
the stature of these operators, competitors are now believed
to be seriously reconsidering technical as well as marketing
strategies, either to use WiMAX as a complement to 3G services
or move altogether to WiMAX as the BWA platform and slow
implementations in 3G. After all, there are limited investment
funds to be spent, and if indeed traffic will move to an
all-IP platform, WiMAX (at least today) offers the technology
by which to establish a foothold for an all-IP offering.
- Sprint in the United States is significant due to the number
of subscribers it can leverage and territorial coverage or
footprint where it can offer services. Sprint’s main
competitors have to be looking closely at the impact of WiMAX
in terms of both operational costs over the long term,
application suites the technology can support, and the impact
on subscribers who may churn towards Sprint given a WiMAX
capability. In the end, a simple labeling strategy may spell
the competitiveness difference as customers such as “The
Younger Set” or “The Road Warrior” may perceive WiMAX to be a
more compelling, attractive and “hip or cool” technology
compared to 3G. And given the success of WiFi, consumers that
are less than technically savvy may just go with a label that
basically says to them (either rightly or wrongly) that WiMAX
is an extension and superior to WiFi and 3G.
- Clearwire is also a significant player in the U.S. market. A
new entrant trying to break the stronghold of established
players, the company is using WiMAX to leapfrog to 4G. Given
the benefits and relatively low entry costs for supporting 4G
services, Clearwire represents an operator that can seriously
challenge incumbents via the WiMAX platform for BWA and
traditional services.
- In the Asia Pacific, Korea Telekom is pushing for WiBro and
has tapped the mobile market ahead of other regions of the
globe. The Asia Pacific is expected to represent the largest
WiMAX opportunity, given the adoption of new technologies and
services the region has traditionally exhibited, as well as
the growing affluence of the population base in both
enterprise and consumer segments.
- Other regions of the globe are expected to adopt WiMAX as
well where niche opportunities in both fixed and mobile
platforms should be sustainable within this report’s forecast
period.
- NSR expects 802.16d equipment to be certified and continue
to be deployed in earnest throughout 2007. Fixed access
equipment and base stations have been shipped in 2006, and NSR
believes growing volume of certified 802.16d equipment will be
shipped in 2007 through 2008, before slowing once
nomadic/mobile certified equipment becomes available.
- NSR expects the first 802.16e equipment to be certified in
2007, and commercial shipments will start sometime within the
year. Many vendors are bypassing the fixed market in favor of
mobile/nomadic services as these are believed to present
greater growth. However, there are niche players that see
fixed applications for developing country needs to be their
“sweet spot” of market demand such that fixed and
nomadic/mobile equipment and service business propositions
will co-exist for some time. Although some cannibalization
will take place as end users begin to prefer nomadic/mobile
platforms, cost considerations and usage needs should lead to
a sustainable business model for fixed services, specifically
on the service side of the market.
Conclusions
From market hype that has dominated over the past 2-3 years,
WiMAX is now becoming a reality as technological developments,
business planning and actual deployments have begun to take
place. The key to WiMAX success is the ability to offer mobile
or nomadic capabilities and when mobile WiMAX is launched, it
will target the highly developed metro markets primarily for
enterprise rather than consumer applications. The market’s
“sweet spot” includes end users with a high penetration of
laptops and handheld devices and thus possess a high
disposable income level that would justify an operator’s
expenditures on 802.16e WiMAX infrastructure.
Yet, despite its technical and market merits, WiMAX is not
envisioned to become the “be all and end all” of the BWA
market. WiMAX is foreseen to co-exist with other platforms
(specifically WiFi and 3G) at least within this report’s
forecast period, which ends in 2012. WiFi and 3G players are
not expected to stand idly by while WiMAX cannibalizes their
market shares in the BWA market.
As the battle for the eyes and ears of business people and
consumers on a mobile or nomadic platform becomes more
intense, the response from various platforms that exist today
and those that will likely enter the market in the future will
lead to innovations and creative business propositions that
will make the marketplace more interesting and more
competitive. WiMAX will have its place in the BWA market, and
NSR projects a growing share over time. It is too early to say
whether WiMAX will dominate the BWA market, but it is
certainly positioned given its technical and cost merits to
indeed threaten 3G and WiFi over the long term as wireless
telecom services move to an all-IP platform. Within this
report’s forecast period, however, WiMAX is expected to be a
comparatively small market compared a subscriber base that has
reached critical mass, specifically the 3G platform. |
