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US$100 is WiMax sweet spot

The mobile broadband technology will take off in a big way when the cost of customer premise equipment drops to US$100, says IDC analyst.

KUALA LUMPUR--The speed at which WiMax is adopted by consumers will hinge on how quickly the cost of customer premise equipment (CPE) falls, according to an industry expert.

Speaking to the media at the Motorola WiMax Think Tank Forum here Wednesday, William Rojas, director of telecom services for research firm IDC, said: "The race [to lower CPE prices] has begun." Rojas added that WiMax will take off in a big way when prices drop to about US$100.

The IDC analyst explained that the cost of WiMax CPE is not only closely dependent on the research and development (R&D) cost, but also to the licensing and royalties schemes associated with the technology.

"There are about 1,500 patents associated with the development WiMax technology, according to the WiMax Forum," he said. "No one company holds more than 10 percent of WiMax patents, and this potentially keeps the price of WiMax CPE chipsets down."

In comparison to WiMax CPE, Rojas said high-speed downlink packet access (HSDPA) chipsets today have only just broken through the US$200-price barrier. Because of the challenges surrounding royalties associated with HSDPA technology, chipset makers will find it hard to drive prices further down to the US$100 range, he added.

"WiMax chipsets--costing about US$175 today--do not face the same challenges," said Rojas. "Their prices are expected to drop further in the coming year due to the economies of scale created by chipmakers [including] Taiwan Semiconductor Manufacturing Company (TSMC) and Zyxel."

In addition, telecom giants such as Qualcomm and Nokia, have in recent years been locked in protracted legal disputes over patent infringement issues, royalty payments and intellectual property rights associated with Qualcomm's CDMA technology. This has caused chipsets to stay at a relatively high price compared to other chipsets such as Wi-Fi, which have a markedly lower price.

Promising take up
Meanwhile, the momentum of WiMax deployment in the Asia-Pacific region is gaining ground, said Jay Andersen, vice-president of home and networks mobility sales for Motorola Asia.

In his keynote address, Andersen said Pakistan has the world's largest commercial WiMax network, having rolled out commercial networks in 17 cities. The mobile broadband technology, he noted, is being used in the country to support connectivity for banks, supply broadband services to enterprises and provide wireless DSL services to consumers.

"Motorola is conducting trials in countries including Vietnam, Malaysia, Singapore, Taiwan, Bangladesh and Indonesia. Operators in these countries believe WiMax is the best solution to provide its users high-speed data networks," Andersen said.

Michael Lai, CEO of new Malaysian broadband entrant PacketONE International, said WiMax has great potential for the region.

A guest speaker at the forum, Lai said Malaysia's total estimated market potential for broadband services, including content, is valued at about 23 billion ringgit (US$6.8 billion). "If we, as an operator, can tap 10 percent of this [market] share, it would be a very significant [business] for us," he said.

Edwin Yapp is a freelance IT writer based in Malaysia.