WiMax is a niche technology

WIMAX MIGHT NEVER amount to much more than a niche market technology, according to a recent report from analyst firm Ovum.

According to its WiMax in emerging markets: the opportunity assessed report, Ovum reckons that, not only has the next generation mobile data access platform struggled to take off in developed regions like Europe, North America and Asia, but it could face a tough time in emerging markets as well.

Despite the low fixed-line penetration in developing nations, factors such as cost, coverage, vendor support and service provider choices will hinder uptake of the technology, although that is not expected to impact the distribution of these networks in the short term.

"Two thirds of the 300+ WiMax networks globally are in the emerging markets of Africa, Asia, Eastern Europe, Middle East and Latin America," said Angel Dobardziev, practice leader at Ovum.

"Yet, most emerging market WiMax operators currently have thousands, or tens of thousands of subscribers, rather than the hundreds of thousands of subscribers that they planned to have at this stage."

As of August 2009, Russian operator Scartel is the first emerging WiMax player to have hit the 100,000 subscriber mark, ahead of Packet One in Malaysia with 80,000, with the majority of players lagging behind their initial rollout and subscriber targets.

The problem, it seems, is that WiMax doesn't stack up as sufficiently competitive against other fixed or mobile technologies in the urban areas, and the harsh economic climate makes it difficult for these companies to get the funding required to roll them out to the greenfield locales where they would be more competitive.

"On a non-subsidised basis, it is currently priced and positioned as a broadband option only for businesses or wealthy consumers," explained Dobardziev.

"The cost of customer equipment remains the key stumbling block for WiMax operators, where both DSL and HSPA outperform WiMax with significantly greater economies of scale."

As a result, Ovum expects WiMax to suffer the same fate in these developing nations as it has in mature markets - becoming a part of the fabric of broadband access, rather than the shining star of wireless data accessibility.

"We forecast that WiMax will account for less than five per cent of the 1.5 [billion] fixed and mobile broadband access connections in the emerging markets by 2014," concluded Dobardziev.

"WiMax coverage will remain mostly in large urban centres where it will compete against DSL, HSPA/EV-DO and in some cases fibre services. We expect DSL and HSPA/EV-DO to remain more cost and price competitive against WiMax in the next five years in terms of infrastructure, and particularly customer equipment."

If Ovum's predictions are correct, this then leads to a vicious cycle, as device manufacturers will be less inclined to incorporate WiMax support into laptops, phones and other connected consumer electronics - which in turn will reduce uptake and so even further lessen demand.

The report doesn't mention whether WiMax's biggest rival, long term evolution (LTE), might suffer the same fate. But as it is starting to reach the point of significant trials with rollouts expected in the not too distant future, arriving late to the party might actually be a good thing for the technology as signs of slow recovery are starting to appear and demand for mobile data access is starting to approach the limits of what current platforms can deliver. µ