Reports from Analysis Research

1. The Business Case for WiMAX
Alastair Brydon and Mark Heath
with Alex Zadvorny
Edited by Sarah Peake

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ISBN 1 905495 24 2

3. © Analysys Research Limited 2006 Contents
Contents
0 Summary vii
1 Despite vendor enthusiasm, few business cases for WiMAX will be
viable 1
2 Business cases for WiMAX showing attractive returns are based on
optimistic assumptions 2
2.1 WiMAX addresses important weaknesses of fixed wireless technologies, and
deployment plans are now emerging 2
2.2 The WiMAX Forum has produced business cases that show attractive
opportunities in a variety of market situations 4
2.3 A small number of critical factors in the WiMAX business case will make the
difference between success and failure 7
2.4 Only a small number of WiMAX business opportunities may have viable
long-term business cases 13
3 WiMAX will take a long time to deliver strong returns in
developing countries 15
3.1 Limited competition from fixed networks in developing countries bolsters the
business case for WiMAX 15
3.2 WiMAX service growth will be slowed by low disposable income, lack of
PCs and growing strength of cellular services 16
3.3 Slow take-up and low ARPU could damage the business case for WiMAX in
developing markets 19
3.4 Potential WiMAX operators in developing markets must select their targets
with care 22
4 In rural areas of developed markets, the business case is weak 23
4.1 Less developed fixed broadband services could bolster the business case for
WiMAX in rural areas of developed countries 23
4.2 The rapidly growing reach of DSL services in rural areas will encroach on the
opportunities for WiMAX 24
4.3 Growing competition from DSL will damage the business case for WiMAX
in most rural areas 26
4.4 Potential WiMAX operators must be aware of the changing competitive
landscape in rural areas of developed markets 29

4. iv The Business Case for WiMAX
Contents © Analysys Research Limited 2006
5 In developed markets direct competition will rarely be viable 30
5.1 WiMAX will struggle to compete with DSL services from incumbent operators,
retail service providers and local loop unbundlers 30
5.2 In an urban area of a developed market getting a good return from WiMAX
will be a challenge 33
5.3 When competing with DSL in urban areas of developed markets WiMAX
will only be viable in exceptional circumstances 35
5.4 It is unlikely that mobile operators will embrace WiMAX unless all other
options are closed 36
Actions 39
Market intelligence services from Analysys Research 41
Reports from Analysys Research 42
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Analysys Consulting 44
List of figures and tables
Figure 0.1: Critical factors in the business case for WiMAX vii
Table 2.1: Fixed and mobile WiMAX capabilities, and timescales for equipment
availability 3
Table 2.2: Recent Motorola announcements of mobile WiMAX deployments 3
Table 2.3: Business case scenarios for developed markets modelled by the
WiMAX Forum 4
Table 2.4: Business case scenarios for developing markets modelled by the
WiMAX Forum 6
Figure 2.1: Critical factors in the business case for WiMAX 7
Table 2.5: Growth in data rates from developments in DSL standards 9
Table 2.6: Possible scenarios for the successful deployment of WiMAX 14
Figure 3.1: GDP per capita for a selection of developed and developing countries,
2005 17
Figure 3.2: Comparison of PC penetration rates for a selection of developed and
developing countries, 2005 17
Figure 3.3: Penetration of telecoms services in Pakistan, March 1997–March 2006 19
Table 3.1: Key assumptions in WiMAX business cases for an urban area in a
developing market 20
Figure 4.1: Proportion of EU households equipped with at least one computer,
December 2005 24
Table 4.1: Details of Telabria’s ‘So’ services, September 2006 26
Table 4.2: Key assumptions in WiMAX business cases for a rural area in a
developed market 27
Figure 5.1: Broadband penetration in Western European countries,
March 2003–December 2005 33
Table 5.1: Key assumptions in WiMAX business cases for an urban area in a
developed market 34
Table 5.2: Mobile operators’ options for offering Internet access services to homes
and workplaces 37

5. The Business Case for WiMAX v
© Analysys Research Limited 2006 Contents
Authors
Dr Mark Heath and Dr Alastair Brydon are founders of Sound Partners Ltd and authors
of more than 20 reports from Analysys Research, including Forecasting the Commercial
Impact of Wireless VoIP in the USA and Western Europe, Pricing Mobile Services for
Success: towards a bundled future, Evaluating the Options for Mobile TV and Radio
Broadcasting in Western Europe, Lessons from the Japanese and South Korean Mobile
Markets: handsets, services, content and pricing, Prospects for the Evolution of 3G and
4G, Scenarios for the Evolution of the Wireless Industry in Europe to 2010 and Beyond,
Accelerating Fixed–Mobile Substitution: detailed operator case studies, Delivering
Strategic Benefits with IP Multimedia Subsystem (IMS), The Future of MVNOs in the 3G
Era and The World’s Top Ten Wireless Services.
Alastair is CEO of Sound Partners Ltd. Prior to joining Sound Partners, Alastair reported to
Nokia’s European management team and worked with many of
Nokia’s customers to implement market firsts ranging from the
introduction of prepaid mobile tariffs to new mass-market content
services. Previously, Alastair worked in a number of roles for the BT
Group, focusing on the evolution of wireless services, networks and
technologies. He also contributed to international research and
standardisation of GSM, DECT and 3G. Alastair holds BSc and PhD
degrees from UMIST, where he was awarded the IEE Prize for top
student.
Mark is Director of Research at Sound Partners Ltd. Mark has held a number of marketing
and business development roles in Nokia, ultimately becoming
responsible for strategy and business development across Europe.
Previously, Mark was responsible for business planning at BT
Cellnet in the UK, after spending six years at BT in wireless systems
research and development. Mark holds BSc and PhD degrees from
the University of Leeds, winning the University prize for his
research in telecommunications. Mark also holds an MBA,
graduating as top student from Henley Management College.
Alex Zadvorny (Senior Analyst) specialises in European mobile markets and has written
and contributed to Analysys Research reports, including Forecasting
the Commercial Impact of Wireless VoIP in the USA and Western
Europe, Pricing Mobile Services for Success: towards a bundled
future, Evaluating the Options for Mobile TV and Radio
Broadcasting in Western Europe, Making a Success of the Mobile
Content Value Chain, The Western European Mobile Market: trends
and forecasts 2006–11 and The Central and Eastern European
Mobile Market: trends and forecasts 2006–11. He has also worked
on a number of strategic custom projects. Having begun his career in Ukraine, Alex worked
as an equity analyst in London for several years before joining Analysys. As well as a
degree in Economics, he holds an MBA from INSEAD in France.

6. vi The Business Case for WiMAX
Contents © Analysys Research Limited 2006
Acknowledgements
The authors would like to thank all those who assisted in the preparation of this report,
especially Ross Pow and Andrew Wright for their suggestions and opinions, Sarah Peake
and Claire Varley for editorial support, and Andy McKinnon (Motorola) for an interview.
Disclaimer
Figures and projections contained in this report are based on publicly available information
only and are produced by Analysys Research Limited independently of any client-specific
work within the Analysys Mason Group. The opinions expressed are those of the stated
authors only.
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Glossary of terms
3G Third Generation Mobile System
3G LTE Third Generation Long-Term
Evolution (also known as ‘Super
3G’)
ADSL Asynchronous Digital Subscriber
Line
ADSL2+ Asymmetrical Digital Subscriber
Line 2+ (ITU-T G.992.5; 25 Mbit/s
downstream rate)
ARPU Average Revenue Per User
CDMA2000 3G variant of Code-Division
Multiple Access
CPE Customer Premises Equipment
DSL Digital Subscriber Line
DSLAM Digital Subscriber Line Access
Multiplexer
FTTH Fibre To The Home
GDP Gross Domestic Product
GSM Global System for Mobile
communications
HSPA High-Speed Packet Access
HSDPA High-Speed Downlink Packet
Access
IDEN Integrated Despatch Enhanced
Network
IEEE Institute of Electrical and
Electronics Engineers
I-HSPA Internet High-Speed Packet Access
IMS IP Multimedia Subsystem
IP Internet Protocol
IPTV Internet Protocol Television
IRR Internal Rate of Return
ISP Internet Service Provider
LLUB Local Loop Unbundling
Mbit/s Megabits per second
ms millisecond
NPV Net Present Value
OECD Organisation for Economic
Cooperation and Development
PC Personal Computer
PSTN Public Switched Telephone
Network
SME Small or Medium-sized Enterprise
VDSL Very-high-bit-rate Digital
Subscriber Line
VoIP Voice over Internet Protocol
WiFi Wireless Fidelity
WiMAX Worldwide Interoperability for
Microwave Access: IEEE802.16

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