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WiMAX Forecasts: Supply and Demand meet 4G convergence

By Adlane Fellah, CEO and founder
Contact the author at afellah@maravedis-bwa.com

WiMAX is an important and highly visible part of the evolving fixed/portable wireless landscape. WiMAX is certainly gaining momentum, what with the recently announced BSNL deployment as well as the articulation of Sprint’s 4G vision. Nevertheless, the market for WiMAX fixed deployments market remains diverse and includes competing technologies such as DOCSIS, TD-CDMA, and proprietary equipment such as Canopy from Motorola.

The fundamentals for continued growth in the broadband wireless market remain sound. Broadband is increasingly a necessity for many residential and business subscribers worldwide. Demand is exploding as the pricing of broadband services continues to decline: There were close to 350 million broadband subscribers worldwide at the end of 2007, up from 130 million at the end of 2004.

More than 200 million users still access the Internet with dial-up analog technologies, and more than 900 million are using the Internet occasionally but do not subscribe to a monthly service. The opportunity for BWA/WiMAX to serve those who want to switch to broadband service is huge in many parts of the world where wireline technologies may not be feasible.

 

WiMAX has made important progress in 2007:

• The ITU recommendation adding WiMAX as an official 3G protocol has already yielded positive results with new spectrum auctions. In the Netherlands and New Zealand, spectrum winners pledged to roll out WiMAX networks in bands previously reserved for 3G mobile phones.
• As we predicted, more than 100 Mobile WiMAX devices have been either announced or made commercially available.
•  As we predicted in the 4th edition of this report, the fixed/portable broadband wireless access equipment market (sub-11 GHz) grew from US$562 million in 2005 to US$1.2 billion in 2007.

 

Mobile WiMAX Forecasts: Demand and Supply

The number of mobile subscribers worldwide reached 3 billion at the end of 2007 and is predicted to rise to 4 billion by 2011. We have said in previous editions that Maravedis did not expect WiMAX to become a “3G killer” in the near future. This remains true despite recent progress made by technical specifications and vendor technology demonstrations for LTE in 3GPP Release 8. WiMAX provides a framework for 4G mobile services. In fact, with the prospect of an introduction of multimode devices starting in 2008-2009, WiMAX will become an exceptional enhancement to existing cellular 3G networks. Thus, operators who adopt WiMAX multimode offerings are not pressed into either replacing or displacing service to customers.

Sprint’s commitment to WiMAX does affect heavily our forecasts of mobile WiMAX subscriber and CAPEX numbers.  Despite current uncertainties, we recently stipulated our belief (SEE: “Opportunities and Challenges for Broadband Wireless and WiMAX in the USA, 1st Edition”) that Sprint has the best mobile WiMAX opportunity and will proceed with its XOHM WiMAX play under three possible scenarios described in the report.

Whether it is LTE or WiMAX ,  the success of mobile broadband will be driven by the development of user-friendly applications and affordable handsets. While highly demanding business users will fuel the concept of personal broadband for productivity, it is the mobile consumer market that will represent the lion's share of mobile data services in the long term. End-users are no longer just consumers of media applications, they are also becoming producers of content such as photos, videos, music, and additional formats sent wirelessly.

The following exhibit presents our market forecasts for demand and supply of WiMAX CPEs and mobile devices for the coming years. Considering the upcoming “push” strategy by Intel and others, we have introduced separate forecasts for the demand as represented by active WiMAX customers, and supply of WiMAX embedded multimode devices. Just because a device is WiMAX enabled does not mean that it is used actively. This is a very important distinction.

WiMAX chipsets will start to be embedded into laptops in the second half of 2008, into handheld devices in the beginning of 2009, and into consumer electronics in the beginning of 2010. This is obviously a key assumption as multimode devices will expand dramatically the potential markets for WiMAX, especially when WiMAX chipsets are embedded into cellular handsets and base stations.

Source: WiMAX, LTE and Broadband Wireless (Sub-11GHz) Worldwide Market Trends 2008-2014 – 5th Edition

Demand from active WiMAX subscribers is more linear as it is linked to the build-up of WiMAX networks.  The supply of WiMAX embedded devices is a function of the CAPEX investments made by operators such as Sprint. The two will continue to evolve in a less correlated manner for some time to come, that is until the market and technology matures beyond 2020.

For more information you can contact the author. afellah@maravedis-bwa.com