WiMax faces fight from existing mobile operators

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WiMax faces fight from existing mobile operators

Don't write off mobile technology yet, warns analyst.

WiMax wide area wireless networking technology will face an uphill struggle in developing markets against existing cellular mobile voice services, market watchers predicted today.

A new report from Analysys argues that the much hyped potential for WiMax in developing markets, where there is little competing fixed infrastructure, is exaggerated. 

"The prospects for WiMax in developing markets will be severely limited by a lack of PCs, low disposable incomes and the growing strength of cellular services," said report co-author Mark Heath.

"Cellular voice services will be much more appealing to most people, particularly as handsets are available very cheaply."

The study noted that limited disposable income in developing markets places major constraints on the revenue that will be spent on telecoms in general.

For example, GDP per capita in the US is between seven and 25 times greater than in countries such as Poland, Algeria, China, India and Pakistan.

Analysys added that the lack of PCs in such areas will limit demand for internet access in developing markets.

PC penetration in the US is over 75 percent, compared with six per cent in Bulgaria, five percent in Panama and less than two per cent in India and Kenya. In such areas mobile voice services are much more likely to be popular.

Operators will have to set service prices at low levels and bear the substantial cost of WiMax customer premises equipment (CPE) to help achieve growth.

The cost of WiMax CPE is predicted to remain high, as WiMax will be unable to achieve the same economies of scale as mobile systems.

Cellular penetration is already growing rapidly in developing markets, and taking a significant share of the limited disposable income, according to the report's co-author, Alastair Brydon.

"Mobile penetration in Pakistan rose from nine percent in July 2005 to 24 percent in July 2006, fuelled by falling prices of handsets and services," he said.

"This will provide a platform for mobile operators to develop a range of non-voice services, which will further suppress the need for WiMax."
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