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Poor business case could hobble WiMax

Analysts suggest DSL will win in the developed world, while deploying WiMax in the developing world will prove too costly
Written by David Meyer, Contributor

The long-range wireless broadband technology WiMax is going to face difficulties due to poor business cases, communications analysts have suggested.

According to Drs Mark Heath and Alastair Brydon of Sound Partners Ltd, WiMax will come under intense pressure from rival wireless and fixed-line technologies in the developed world while, in the developing world, limited disposable income will prove another barrier to its adoption.

"In developed countries, rural towns without DSL or cable services appear to offer lucrative opportunities for WiMax services, with affluent customers and pent-up demand for broadband services," the authors note in the report, entitled The Business Case For WiMax. "However, as the capability and reach of DSL technology increase and services become deployed more widely, there may be very few opportunities beyond the next three years."

The WiMax certification process suffered repeated delays, and experts have warned previously that this has hampered its chances of widespread adoption.

The assumption that the spread of WiMax in the developing world will be helped "by virtue of the lack of a viable fixed network alternative" is also attacked in the report. Heath and Brydon suggested that WiMax operators might be able to seize the broadband market in such countries, but low-cost competition from cellular operators in what are primarily voice-centric markets could make WiMax a niche service.

Heath and Brydon also point out that WiMax receivers are relatively expensive for developing world consumers, so operators there could have to bear the cost of this themselves if they want to stimulate uptake.

The authors go on to suggest that WiMax vendors and the WiMax Forum "need to develop more detailed business cases for the strongest market opportunities" and recommend "regulators in developed countries, seeking to foster competition in the broadband market, should focus primarily on stimulating DSL competition".

WiMax is slowly making its way to the UK, with the fixed or nomadic variant already undergoing commercial trials in Milton Keynes and with the mobile flavour apparently coming next year.

The technology is also being used to provide connectivity to on-train Wi-Fi systems by rail operators including Virgin and Southern Trains.

However, it is regarded as a rival technology by many operators in the developed world who have already invested heavily in 3G technology and are currently lobbying against the WiMax camp — which includes heavy hitters such as Intel — in a battle for spectrum.

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