Frost: IEEE 802.16 WiMAX Shows Potential to Serve Rural Areas
June 26, 2008 // Published as a news service by IHS
IEEE 802.16 worldwide interoperability for microwave access (WiMAX) holds promising potential as an alternative technology to connect underserved rural areas that will never realistically receive fixed-line services.
According to Frost & Sullivan, the "sweet spot" for WiMAX is its ability to provide voice and data connectivity at speeds up to 1 Mbps in Asia's emerging markets where such digital divide exists.
Analysts said this massive untapped segment is expected to drive WiMAX deployments in the Asia-Pacific, despite competition from third generation (3G) technology and regulatory issues in some countries.
Recent analysis from Frost & Sullivan found that the Asia-Pacific region could potentially have 43 million WiMAX subscribers by the end of 2013, generating estimated revenues close to $11 billion, at a compound annual growth rate (CAGR) of 45% (2007-2013).
The emerging markets are expected to account for nearly 80% (or 34.4 million) of the total subscribers in 2013, collectively contributing 69% (or $7.59 billion) to the region's total WiMAX revenues given their low average revenue per user (ARPU) nature, analysts said
The Asia-Pacific region is home to the entire gamut of market characteristics, analysts said, from the extreme emerging markets like Bangladesh and Pakistan with under 1% of household broadband penetration, to the world's most wired and highly saturated markets, such as Hong Kong and South Korea.
At the end of 2007, Asia's household broadband penetration stood at 3.4%. Analysts said this translates to nearly 3.7 billion people in the region who have yet to adopt broadband access services - a figure significantly higher than the world's entire mobile subscriber base. Asia-Pacific remains the best test-bed for WiMAX in terms of subscriber uptake and network deployments.
"In such a diverse market, the business models for WiMAX will depend largely on service level uptake, as operators in emerging markets will focus on enterprise users before catering to the mass market," said Frost & Sullivan senior industry analyst Marc Einstein.
"Transition markets such as Malaysia will focus on the underserved pockets in urban areas, while operators in markets such as Japan and South Korea will drive new business models by embedding WiMAX chipsets in a wide range of consumer devices, including cameras and game consoles, to pioneer WiMAX-enabled mobile devices," he said.
To date, however, WiMAX adoption has been lukewarm and still faces a number of challenges ranging from regulatory issues to weak operator support to high customer premise equipment (CPE) prices.
According to Einstein, WiMAX has the potential of bringing Asia's masses online. "The real issue facing WiMAX is not its technical capabilities, but whether it will get enough traction and stakeholder involvement to graduate from a niche application to a mainstream technology that can be profitably deployed at price points that will drive wider adoption," he said.
Of the 17 Asian countries Frost looked at for regulatory support and operator willingness to deploy the technology, Pakistan, Sri Lanka and India topped the list due to excellent incumbent support, favorable regulatory regimes and considerable untapped growth.
"While the regulatory restrictions continue to ease up, some large Asian markets such as China and Indonesia have made very little progress in licensing WiMAX," Einstein said, adding that China alone has the power to make or break WiMAX service in the region if its government continues to delay WiMAX rollout as it did with 3G.
Given a favorable government stance, analysts said China is forecast to account for as much as 45% (or 19.35 million) of total WiMAX subscribers in 2013.
However, as large established operators such as Japan's KDDI and India's Bharat Sanchar Nigam Ltd. (BSNL) continue to pursue deployments, analysts said WiMAX may get a fresh lease on life in 2009.
Source: Frost & Sullivan.