Operators Wary of WiMax, Study Says

By Vikki Lipset

November 19, 2003

Fixed wireless operators aren't exactly jumping up and down in anticipation of its arrival, but at least one major carrier could be a likely suspect to deploy WiMax.

Many are calling WiMax the next big thing in wireless. Yet lost in the hype is the fact that fixed wireless operators have not yet embraced the technology, says John Yunker, a Pyramid Research analyst.

In a new report, "Wi-Fi and WiMax: Unwiring the World," Yunker predicts that WiMax will ultimately succeed, making up 60 percent of the broadband wireless market by 2008, but points to operator skepticism as one of the chief challenges that it will face in the meantime. "The fixed wireless industry is littered with broken promises," he says, and operators will remain leery of adopting 802.16a equipment until prices come down and the technology is proven.

A few high-profile deployments could go a long way toward assuaging operators' concerns. Yunker speculates that Nextel might begin supplying fixed wireless services to enterprise clients in early 2005. "Their competitive advantage in push to talk is clearly being eroded, so they need to look for a new way to capture the enterprise."

He points out that Nextel, the nation's No. 5 wireless carrier is already acquiring the necessary spectrum, and that WiMax would give them an edge over other carriers. Intel and equipment vendors may even subsidize and promote such a rollout, he suggests.

WiMax will evolve in two stages, says Yunker. The first stage will begin in the middle of next year, when commercial gear hits the market. The initial products will be similar to current broadband wireless equipment in terms of price and function, Yunker notes.

The second stage, he says, will begin with the introduction of portability via 802.16e, as WiMax chipsets are built into laptops and other mobile devices along with Wi-Fi. "This is where it's really potentially disruptive," he says. This second stage won't begin until at least 2006, as the 802.16e standard hasn't even been finalized.

By 2008, Pyramid forecasts that there will be 2 to 4 million broadband fixed wireless lines, generating up to $2 billion in access revenues. Asia and Central and Eastern Europe will be the two hottest markets; they are expected to add nearly 2 million lines in the next five years.

Operators in emerging markets are interested in WiMax for low-cost voice transport and delivery, while in developed markets, operators view it more as a means of delivering high-speed Internet access. Either way, despite their initial reservations, the operators will eventually come around.

"At the end of the day, it's about getting connectivity to rural and underserved markets," says Yunker, "and this will be the cheapest alternative."

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