WiMAX Networks

ARTICLE

WiMAX Networks
Heralding a New Milestone in Pakistan

By Basharat H. Ashai, Market Analyst - Asia Pac & Middle East
Contact the author at Basharat@maravedis-bwa.com

The telecommunication industry in Pakistan has witnessed some major shifts over the last couple of years with WiMAX network deployments dominating the scene. Broadband growth (through DSL, cable and FTTH) in the country has been dismal despite the fact that the services have been available for more than five years. The cost of the service is the main reason for this slow growth. For example in India, broadband service (1Mbps and 2.5GB download/upload) is available for just under US$12 per month. In Pakistan, the same package costs twice as much -- US$24 per month --making the service out-of-reach for the majority of residents.

Pakistan currently has approximately 5 million copper lines deployed nationwide, servicing about 2 million dial up customers. Over the last two years however, there has been a drop in the numbers of fixed line subscribers as wireless local loop (WLL) has gained recognition as a less expensive alternative. The latest report issued by the national regulator in August 2007 stated the number of fixed line users dropped by 200,000. PTCL, Pakistan’s incumbent fixed line operator, started deploying a CDMA based network in 2004 to address the growing WLL market, and continues to add 0.3 million subscribers (March 2007 - March 2008) per month on its network. The majority of WLL operators that have commercial service have offered it primarily on CDMA. The number of WLL subscribers nationwide has grown in the last three to four years to 2.4 million as at April 2008.

There are 12 million Internet users in Pakistan, but only 128,000 have broadband access. With a population of roughly 160 to 170 million and 35 million households, WiMAX is seen as the new emerging technology for providing cost-effective broadband to consumers. Pakistan’s regulator began auctioning off the 3.5 GHz frequency band for WiMAX use in 2004. All 14 of Pakistan’s operators now hold WiMAX licenses in this frequency band, covering all regions nationwide.

There has been a lot of M&A activity in Pakistan on the WiMAX spectrum front. There are various players that are interested in acquiring operators that already have a WiMAX license, including operators from the Gulf region who want to start WiMAX services in Pakistan. Burraq Telecom is one example; they were acquired by the ACT consortium (including Qatar Telecom and Clearwire Corporation), which plans to offer WiMAX in Pakistan. Mobilink is another example; they did not purchase WiMAX spectrum, but rather acquired Dancom and DVCOM, which had access to 21 MHz and 14 MHz respectively. Wateen Telecom, on the other hand, has access to 21 MHz of spectrum at 3.3 GHz. In some of the largest cities, Wateen actually has 42 MHz. The initial spectrum was acquired originally through the bidding process and then subsequent acquisitions from the third parties.

There are also some WLL operators (Z-WLL, Burraq and Cybernet) that are also involved in the deployment of WiMAX networks in Pakistan, but most of these operators are still in the test phase. The three largest operators - Mobilink (Orascom Telecom Company), Mytel and Wateen Telecom - have already launched commercial WiMAX services.

Wateen Telecom and Mobilink are the two major players in Pakistan in terms of the number of cities covered with WiMAX, while Mytel, a local operator, is operational in only one city i,e Peshawar. Wateen’s WiMAX network currently covers 22 cities using approximately 800 Motorola base stations to support an estimated 25,000 subscribers. Wateen expects to deploy another 800 base stations in these same cities to increase coverage and capacity.

On the other hand, Mobilink is focused on deploying in dense-population cities only – currently covering only six cities in Pakistan with its 802.16e-2005 network. Mobilink is working with three vendors - Alcatel-Lucent, Huawei and Motorola -- and has deployed roughly 500 base stations, the majority of which are in Karachi which has a population of 16 million people and half a million businesses. Mobilink’s mass market launch is expected in the fourth quarter of this year, targeting in excess of 1.3 million middle class homes.

Mobilink is still evaluating vendors and has issued an RFP for a $US50 CPE. Of the close to 32 CPE vendors that have responded so far, the majority have been tier 1 Chinese, Taiwanese and Korean CPE vendors. Mobilink plans to finalize the CPE vendor selection within the next four to six weeks. Mobilink launched limited service at the beginning of July 2008 using CPEs from ZyXEL and Motorola, and plan to place a massive order for CPEs in Q4 2008 to support a full-blown launch with a consumer promotion of US$229 (US$86 for the first 500 customers) for the following service offerings:

Internet=1Mbps @ US$17 per month (free till Oct 2008)
Telephony = Free Unlimited till Oct 2008.

In June 2006, Wateen Telecom signed a contract with Motorola for the supply of 198,000 802.16e-2005 based CPEs. Wateen has deployed 25,000 CPEs as of Q2 2008, and expects to complete the order of 198,000 CPEs within the next year.

One of the biggest limitations for the proliferation of WiMAX in Pakistan is spectrum availability. Therefore, to meet future demand, Wateen and Mobilink will need additional spectrum in the coming years. Wateen is, in fact, already working with the Pakistani regulator in order to acquire more spectrum. It is expected that Wateen and Mobilink will face stiff competition from each other in the coming years because both operators have launched WiMAX services in the same cities in Pakistan and both have some tangible advantages over the other. While Mobilink is a major telecom player in the international market with the resources to strike big on the WiMAX front, one really cannot deny the fact that Wateen has been an early adopter of WiMAX in Pakistan. It will also be interesting to see what PTCL plans to do regarding WiMAX, as the incumbent has a license in the 3.5 GHz range that it acquired almost 4 years ago. and is also likely to offer WiMAX services at some point. Being an incumbent, PTCL’s involvement in WiMAX can really spur WiMAX growth, but as of today, PTCL has not made any significant movement on the WiMAX front.

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