WiMax in emerging markets a niche rather than mass market, says Ovum report

For mobile operators which have rolled out or are keen on introducing WiMax wireless broadband, a newly published report by a London-based research firm will surely put a damper on their business prospects.

Ovum's latest study said that a "confluence of several factors including technology cost, coverage, vendor support and service provider choices will limit WiMax to only a niche technology in the emerging markets."

The report said the hope and expectation that emerging markets, with their low fixed-line penetration, will become a key hunting ground for WiMax are unlikely to materialize.

That seems to be bad news for Globe Telecom, which has launched its WiMax service early this year, and Smart Communications, which has also indicated its desire to offer the same service by year-end.

As a niche technology, the Ovum report said WiMax will form part of established fixed and mobile operators' broader broadband access portfolios.

Angel Dobardziev, practice leader at Ovum, said WiMax operators currently have thousands, or tens of thousands of subscribers, rather than the hundreds of thousands of subscribers that they planned to have at this stage.

Scartel in Russia is the first WiMax operator in the emerging markets to reach the 100,000 subscriber mark, closely followed by Packet One in Malaysia with 80,000, both announced in August 2009, the report said.

Most emerging market WiMax players are behind their initial rollout and subscriber targets, it noted, adding that the global financial crisis has also made access to finance difficult for greenfield WiMax players.

Dobardziev pointed out that WiMax is not competitive against both fixed and/or mobile broadband alternatives in most urban areas of emerging markets (where virtually all existing WiMax rollouts are) on either coverage or price; and remains unaffordable to the mass market.

"On a non-subsidized basis, it is currently priced and positioned as a broadband option only for businesses or wealthy consumers," he said in a statement. "The cost of customer equipment (CE) remains the key stumbling block for WiMax operators, where both DSL and HSPA outperform WiMax with significantly greater economies of scale."

Ovum said WiMax will remain a niche broadband technology in emerging markets, as it is in mature markets. "We forecast that WiMax will account for less than 5 percent of the 1.5 billion fixed and mobile broadband access connections in the emerging markets by 2014," said Dobardziev

The report concluded: "Ultimately, WiMax will play a role, but it will be a far smaller one than many WiMax players will want to accept today, and the grand hopes of it being a mass market broadband technology for the emerging markets is set to come short in reality."