HSDPA will hold back WiMax, says analyst

SINGAPORE--High-speed downlink packet access (HSDPA) could impede WiMax development in the Asia-Pacific region, says a market analyst.

Teyew Sin Siew, head of telecoms research at Frost & Sullivan, said mobile operators that have already deployed 3G infrastructure are unlikely to drive the adoption of WiMax.

"The heavy financial investment and commitment to [providing] nationwide 3G coverage are key considerations in judging the viability of WiMax in the region," Teyew explained, during a teleconference Thursday with industry players and regulators.

He noted that the "incremental" cost of upgrading to HSDPA--also known as 3.5G--from existing 3G technologies will give the technology a head start over WiMax, which only had its mobility standard finalized last December.

Hardware makers such as Intel, Lenovo and Samsung have already committed to developing HSDPA-enabled devices.

WiMax connectivity, however, will only be commercially available in portable devices in 2009, according to Teyew. And, even then, early WiMax handsets are not likely to be sold at attractive prices, he noted.

The handsets are also unlikely to support applications similar to those available on 3G devices, such as mobile video streaming and conferencing, he added.

In markets where there are established wired broadband technologies such as fiber, DSL (digital subscriber line) and cable, the growth potential of WiMax will be restricted to niche segments, Teyew said.

The reason: WiMax may not be able to meet the needs of users in developed broadband markets, who already enjoy access speeds of more than 10Mbps for video-on-demand, multiplayer gaming, e-learning and pay TV services, he explained. Conversely, the maximum speed of last-mile WiMax connections is just under 2Mbps, he said.

Regulatory challenges will also affect WiMax development in the region, Teyew pointed out. While most regulators are in the midst of allocating frequency bands to smoothen the path for WiMax deployment, progress has been slow, he said.

"The priority given to 3G services by a number of regulators limits the market potential of WiMax in the region," he noted. In Hong Kong, however, the government's proposed wireless broadband licensing is expected to advance WiMax in the local telecoms market.

"WiMax is seen as a viable technology in hastening Hong Kong's move toward a fixed-mobile convergence environment," Teyew explained. "It will also allow competitive service providers to have last-mile access to customers, when their interconnection agreements expire in 2007."

PCCW, which has the most extensive fixed-line network in Hong Kong, next year will likely stop leasing last-mile phone lines to its fixed-line competitors, according to Hong Kong newspaper The Standard.

Teyew projected that WiMax, despite its challenges, will have the biggest following in India and South Korea.

WiMax will have an upper hand in the Indian market due to the lack of competing wireline and 3G technologies in the country, he said, adding the WiMax subscribers in India will reach 7 million by 2010.

"India is a good breeding ground for [WiMax] due to inherent characteristics," he noted. "With 70 percent of India's population living in dispersed rural areas, WiMax's non line-of-sight and long-range features are ideal for immediate network deployment."

Teyew said that WiMax could also be used to deliver voice services to rural, and even underserved urban pockets in India, which has a low telecoms density of just 4.5 percent for every 100 people.

In South Korea, a country that leads the world in broadband penetration, WiMax surprisingly has room to bloom, according to Teyew.

"WiBro, a mobile broadband technology introduced in South Korea, provides a testbed for the viability of WiMax for the rest of the region," he said. "Rather than create a different standard, WiBro has been harmonized to be compatible with the mobile WiMax standard."

The adoption of WiBro has largely been spearheaded by the South Korean government, which wants to see 8 million WiBro subscribers by 2010. "The [Korean] regulator is ensuring that service providers fulfill their commitment to expand WiBro coverage and services," Teyew said.

With fixed-line broadband speeds of 100Mbps already available in South Korea, he said, WiBro can fit into the country's overall broadband landscape through bundled services.

"For example, Korea Telecom is planning to bundle WiBro with wireless LAN (local area network), cellular and DMB (digital multimedia broadcasting) services," he added.

According to Frost & Sullivan, the worldwide WiMax market will be worth US$5.4 billion by 2010, with a compound annual growth rate of 139 percent from 2006.