WiMAX Business Models

(WiMAX World, Boston) This morning's speaker is Caroline Gabriel, Research Director and founder, Rethink Research. She is also the editor of WiMAX Trends, published by Transmedia, the conference producer. Caroline presented research overviews from surveys that Rethink has done with carriers and equipment manufacturers.

WiMAX MYTHS
Myths that Caroline wishes to debunk: (1) WiMAX delivers 70Mbps over 50 miles; (2) WiMAX is cheap; (3) WiMAX is better than 3G; (4) WiMAX IS 4G; (5) WiMAX is an Intel Technology.

Reality:

(1) 802.16-2004 (d) has been approved as a standard for fixed wireless application. 802.16e (the mobile version) is expected for approval by the end of Q3 2005. This is designed to deliver up to 20 Mbps.

(2) There will be downward price pressure, but this will be over the next several years. The introduction of Taiwanese ODMs into this market segment (which is already happening) may accelerate this trend.

(3) There are complex trade-offs between WiMAX and 3G and the comparison between the two cannot be oversimplified.

(4) Hmmm... Maybe this one myth will prove to be true. There are markets where operators are looking at the option of leapfrogging 3G by going directly to 802.16e

(5) Intel has probably done more than any other company to promote WiMAX, but many other companies are working to develop the technology and virtually all of the large manufacturers are now participating in developing and promoting the technology.


CHOOSING A STANDARD
Despite the approval of 802.16-2004, most manufacturers and carriers are now focused on 802.16e. There seems to be broad consensus that the addition of mobility is an enormous value when making the decision to invest in WiMAX. Since 802.16e can also be used for fixed wireless applications, Caroline claims that most carriers will ignore the earlier standard and go directly to the newer 802.16e standard.

Despite this, Caroline believes that 71% of the market opportunity for WiMAX is for Fixed wireless applications and that mobile WiMAX products (certainly certified ones) are a year away. Thus she believes that there is a business case for the existing 802.16 products in certain markets. She specifically called out rural areas and "underserved" markets. Despite this, most large vendors will ignore the fixed standard so this will be a niche market for small manufacturers.


EXAMPLES OF FIXED WIMAX BUSINESS OPPORTUNITIES:

WISP
The WiMAX implementation at 5.8 Ghz is suitable for wireless Internet service providers (WISP) but only for fixed wireless applications. According to Rethink's research, 80% of rural ISPs in the US will implement WiMAX in this part of the spectrum by 2008. Other categories of ISPs have also expressed strong interest in WiMAX. Changes in regulations in the US regarding unlicensed spectrum over the next few years could have a significant impact on these plans.


ENTERPRISE
Number one priority for WiMAX is T1 replacement. AT&T reports that half of all customer access circuits are less than 3 miles and almost all are T1 or lower bandwidth. Thus for companies like AT&T, WiMAX offers an excellent alternative to dependence upon the fixed wire owners.


SMB and VoIP
Small business is projected as the fastest growing and largest segment for WiMAX fixed access applications because it is the most underserved market.

BACKHAUL
While not "sexy" the backhaul applications for WiMAX will be very important in the near term. WiMAX offers a significant economic advantage for building metro area broadband distribution.


SUMMARY
Early launches of WiMAX will include business customers and VoIP applications. In the US it will be largely fixed applications in the 5.8 GHz spectrum. In 2005 WISP, Backhaul and traditional BWA. In 2006 Enterprise, Hotzones, and Underserved markets.

The 3.5 GHz spectrum will be applied in emerging markets today.

Not until 2008 will we see consumer mobility as an application for WiMAX.