Putting weight behind WiMAX

Hilal Halaoui, partner at Booz & Company, on why WiMAX may be the best broadband option

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Putting weight behind WiMAX WiMAX has a number of markets where it can play a role, says Halaoui.
By  Hilal Halaoui Published  January 14, 2011

As demand for broadband services continues to increase across the MENA region, a wide range of broadband technology options are competing for a share of this market. Hilal Halaoui, partner at Booz & Company, explains why WiMAX still remains the one to watch.

As a technology, WiMAX offers symmetrical broadband rates, low latency levels and supports advanced quality of service (QoS) mechanisms for applications, such as VoIP, video streaming and video conferencing. The combination of these features makes WiMAX suitable for a number of applications and a wide range of customer segments, including most enterprise customers. The demand for broadband services can currently be classified into four key market segments based on customer needs.

Mass market fixed broadband

Mass market fixed broadband is the largest segment by far and typifies the ‘broadband for everybody’ approach. The demand in this market is characterised by throughput requirements that can be best served through established fixed technologies such as FTTx and xDSL, but operators seeking to serve this market can use WiMAX in a complementary role, especially in areas with inadequate or nonexistent fixed-line infrastructure, such as rural areas away from telco exchanges.

Mobile/nomadic broadband

The mobile/nomadic broadband segment typifies ‘broadband on the go’ for consumers and enterprise customers. Currently, this segment is dominated by incumbent operators through their investments in the 3G/HSPA network. However, WiMAX remains a valid option for serving this segment.

Fixed-mobile converged broadband

Fixed-mobile converged broadband services offer customers a unified broadband experience, regardless of whether the network is wire-line or wireless. This is the fastest-growing segment, with its expansion driven by the availability of dual-mode HSPA/Wi-Fi devices from leading device manufacturers. By contrast, dual mode WiMAX/Wi-Fi devices are still new in the market. Therefore, they have a relatively high cost, a limited portfolio availability and an immature vendor ecosystem.

Niche market broadband

The niche market broadband segment serves customers with specific needs, such as enterprises in areas that do not have access to fixed-line solutions and so need to be served by wireless technologies. These segments typically demand high data rates and may have distinctive requirements such as point-to-point connectivity or symmetrical data rates for downloading and uploading. For this segment, WiMAX is a preferred technology as it can offer cost-effective broadband over a large coverage area with symmetric data rates.

As operators consider their broadband technology options for the immediate future, it is important to keep an eye on two new emerging technologies, both dubbed 4G: LTE and WiMAX 4G. Both will offer data rates as high as 100Mbps, but operators should not expect interoperability between the two. LTE has taken an early lead over WiMAX 4G and has the backing of global mobile operators and vendors that control more than 80% of the mobile client base. Although the battle for 4G supremacy is poised to be closely fought, the current market gaps that WiMAX could address will likely persist even in the event that LTE emerges as the technology victor.

In short, WiMAX may not be the best choice for every market segment or operator type. Existing broadband technologies such as xDSL/FTTx and HSPA continue to remain strategically superior to WiMAX for most incumbents as they are more mature and compatible with their existing investments.  For new market entrants, WiMAX offers a window of opportunity to enter MENA markets quickly and serve various broadband segments. WiMAX has potential as a wedge to compete with incumbent operators in countries with poor fixed-line infrastructures.

Over the long term, though, WiMAX operators will need to have a clear plan to allow them to gain scale and compete within an increasingly fierce environment, in which other players typically make much larger investments into technologies and network capabilities. The future of WiMAX in the MENA region will depend on its suitability for various broadband demand profiles, its strategic positioning for different types of operators and the willingness of investors to support new operations.

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