Will WiMax play a major role only in developing countries?

From Analysys Mason:

Over the last two or three years, WiMAX has gained a strong foothold in developing countries in which there is a need for broadband, but the fixed infrastructure is poor. However, we doubt that the developing market offers sufficient growth potential and size to sustain continued investment from such heavyweights as Cisco Systems, Intel and Motorola without additional sales in the developed markets. But in the developed markets of Europe and the USA, we see some early signs of a difficult future for WiMAX.

In the USA, Sprint is rolling out a national WiMAX network through its majority shareholding in Clearwire, but the growth in number of subscribers has been disappointing. Google and Intel, among others, have already written off billions of dollars they had invested in Clearwire. This does not look good for WiMAX. Also, it appears that the North American CDMA operators may move to LTE, rather than to WiMAX.

Ericsson’s purchase of Nortel’s interests in CDMA and LTE will encourage CDMA operators to shift to LTE, creating greater acceptance of LTE in North America. Huawei is strongly promoting LTE and has recently opened up a new LTE laboratory in Richardson, Texas, where operators can familiarise themselves with the technology.

In developed European markets, operators are almost certainly upgrading their 3G technologies to 4G LTE in order to match the rising demand for data. Analysys Mason’s Research division recently carried out an extensive series of interviews with the leading MNOs in Europe: none of the operators interviewed hinted that they might adopt WiMAX, now that LTE is imminent. They see WiMAX as a technology to be deployed in an ad hoc fashion in developing countries.

With end-to-end IP capability and a wide choice of carrier frequencies, WiMAX is in many ways an ideal broadband access technology for developing countries with poor fixed infrastructure. A few years ago, WiMAX had a head start on UMTS: it was the first all-IP technology that was well-suited to carrying data, while other advantages, such as enhanced antenna systems and flexible spectrum and bandwidth use, were coming along in the pipeline. However, the lack of a broadband wireless spectrum (for example, 2.6GHz) meant that WiMAX could not capitalise upon this early mover advantage to create markets in the developed countries. LTE now also incorporates the early technology advantages of WiMAX, such as OFDMA and all-IP capability, so we would argue that LTE has caught up with WiMAX.

When the new IEEE 802.16m WiMAX standards are developed, the rivalry between LTE and WiMAX will be greater: in terms of spectrum, bandwidth capacity and coverage, and the development of advanced antenna systems, such as beamforming, LTE and WiMAX will be identical for all practical purposes. We expect that they will compete head-to-head for the same customer base, and LTE will have a clear advantage in this.

We believe that WiMAX has a role to play and will continue, but mostly in developing countries. Because of the limited potential of these markets, there will be some consolidation of vendors and providers along the way.

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