By Mike Roberts, Principal Analyst, Informa Telecoms & Media

 

Introduction

 

WiMAX and other wireless broadband systems are on course to overtake DSL and cable as the main routes to the broadband Internet, according to analysis and data in WiMAX Broadband Convergence: Emerging Fixed, Portable & Mobile Revenue Opportunities, a new strategic report from Informa Telecoms & Media.

 

The worldwide broadband market is currently dominated by wired broadband platforms such as DSL and cable, and those platforms will continue to support the majority of broadband subscribers in the medium term. However, much of the growth in the broadband market going forward will come via wireless technologies such as WiMAX, HSDPA, EV-DO and their evolutions. Some of these technologies are already widely deployed while other are just coming to market, but Informa Telecoms & Media expects deployments and subscriber takeup of most wireless broadband platforms to increase significantly in future as technologies and services improve and costs decline.

 

In fact wireless broadband platforms—including WiMAX, HSPA, EV-DO and their evolutions—will account for 49% of all broadband subscribers worldwide by 2012, up significantly from 17% in 2007, as highlighted in the figure below.

 

 

The number of wired broadband subscribers using DSL, cable, FTTx and other wired systems will continue to increase throughout the forecast period, but the rate of growth will slow as more developed and developing markets reach saturation. However, it should be noted that wired broadband saturation in developing markets will often be relative to the number of wired access lines available rather than to households or population, which is an indication of the limited coverage of wired access networks in many developing countries. This lack of wired infrastructure is also a clear opportunity for wireless broadband technologies such as WiMAX, EV-DO and HSPA.

 

In the US and some other markets, WiMAX will have to overcome the challenges of being a new entrant in a converging broadband market competing with a variety of incumbent systems including DSL, cable, EV-DO and HSPA. In general, the leading wired broadband systems have the ability to offer higher speeds and lower prices than new entrants such as WiMAX, albeit without mobility, while systems such as EV-DO and HSPA typically offer better coverage and mobility than WiMAX, but with potentially higher prices and lower data speeds.

 

WiMAX is a true broadband convergence technology in that a single 802.16e-2005 platform can be used to support fixed, nomadic, portable and mobile broadband services. In addition, many incumbent fixed and mobile broadband operators are planning to use WiMAX to help provide integrated broadband services with widespread and eventually seamless coverage from multiple wired and wireless access networks. These trends mean that WiMAX can only be fully understood in the context of the entire broadband market including all major wired and wireless broadband platforms.

 

 

WiMAX subscriber & revenue forecasts

 

The WiMAX market is at an early stage but has gained significant momentum in the last year – particularly since August 2006, when Sprint Nextel unveiled plans for a US$2.5-3 billion Mobile WiMAX deployment in the US. There are many other large and small WiMAX operators worldwide, but Sprint Nextel’s move was critical since it was the first major, multi-billion dollar commitment by a tier one operator to deploy Mobile WiMAX. That in turn has effectively guaranteed that WiMAX will break out of its traditional fixed wireless niche to play a larger role in the worldwide broadband market. It has also guaranteed that the supply of equipment and devices – one of the key constraints in the market for any new telecoms system – will be accelerated.

On the demand side, it almost goes without saying that WiMAX will benefit from the strong demand for broadband access worldwide, particularly in developing markets, where supply constraints have led to a pent-up demand for high-speed services. On the other hand, WiMAX faces competition from other wireless systems positioning to meet this demand, including EV-DO and HSDPA.

 

After considering these and other global factors, as well as a host of other issues specific to particular regions and operators, Informa Telecoms & Media forecasts that WiMAX subscribers worldwide will increase from 4.2 million in 2007 to 65.6 million in 2012, representing a CAGR of 73% over the forecast period. North America will have more WiMAX subscribers than any other region early in the forecast period, due largely to major deployments by operators such as Sprint Nextel and Clearwire, but Asia Pacific will account for the most WiMAX subscribers by the end of the forecast period. This is due to the combination of WiMAX mobile services that will expand from South Korea to other developed markets such as Australia and Japan, and WiMAX fixed services that will continue to be deployed in major developing markets such as India and Pakistan.

 

WiMAX Broadband Convergence: Emerging Fixed, Portable & Mobile Revenue Opportunities also finds that WiMAX revenues are set to increase significantly. The report forecasts that WiMAX equipment and service revenues worldwide will leap from US$3.4 billion in 2007 to US$31.5 billion in 2012.

 

Devices will account for the majority of equipment revenues in most years of the forecast period, ahead of infrastructure equipment, and access charges the top segment in operator service revenues, ahead of revenues from applications and advertising. Equipment based on 802.16e-2005 will generate the majority of WiMAX equipment revenues in 2007-12, although 802.16-2004 equipment will generate more revenues than many observers expect, due largely to the robust growth expected in developing markets.

 

For all types of WiMAX revenues—including equipment, chipsets and services—North America and Asia-Pacific will be the top two regions worldwide (with the ranking depending on the segment), although Europe, Latin America and Africa/Middle East will each be generating billions of dollars in WiMAX revenues by 2012.

 

For more information on WiMAX Broadband Convergence: Emerging Fixed, Portable & Mobile Revenue Opportunities, please visit www.informatm.com/wimaxreport.