WiMax growth slowing amid recession

WiMax subscriber growth slowed in the first quarter, and the emerging wireless technology will continue to struggle at least through this year, a survey by research company Maravedis indicates.

The global recession weighed down both subscriber additions and the average monthly revenue from business users in the first quarter, according to Maravedis analyst Adlane Fellah. WiMax operators are also running into a variety of other hurdles, including regulation, delayed allocation of spectrum and their own deployment problems, he added.

"I think 2009 is going to be another tough year for WiMax," Fellah said. "It's not declining, but it's not big growth yet."

But WiMax may have a crucial role to play as mobile data traffic rapidly grows in the coming years and potentially strains existing 3G networks, Fellah said. Even carriers that plan eventually to deploy LTE (Long-Term Evolution) may use some WiMax cells to offload data from 3G networks that also have to carry voice. WiMax has a big head start on LTE, which probably won't see wide deployment in most areas until 2012, he said.

The Maravedis survey covered fixed and mobile WiMax, as well as proprietary technologies that preceded the standards-based system. About half of these overall deployments constitute WiMax. But the overall trends in the report apply equally for WiMax, he said.

The number of subscriptions grew about 13% in the first quarter of 2009, compared with about 30% in the fourth quarter of last year, according to Maravedis. There were approximately 3.5 million wireless broadband subscribers worldwide in the first quarter, about half of them using WiMax, Fellah said. About 400,000 more people signed up for wireless broadband service in the quarter. Still, the number of subscribers was up 70% from a year earlier.

At the same time, the average residential user was spending about the same amount of money per month for wireless broadband, and the average business user was paying less. Consumer revenue rose from the equivalent of $42.33 to $42.43, while business users on average paid $116.82, down from $122.64. The advent of new competition in telecom markets (in this case, WiMax vendors) tends to drive down broadband rates, he pointed out.

For Clearwire, the U.S. operator backed by Sprint Nextel, cable operators, Intel and Google, deployment woes are a big factor holding up customer growth, Fellah believes. The company, which is the world's largest wireless broadband operator, added about 25,000 total subscribers in the first quarter, reaching a customer base of about 500,000, he said. Maravedis has no way of knowing how many of those additional subscribers signed up for Clearwire's WiMax service and how many for its legacy network, Fellah said.

"I suspect the number is still very low" for WiMax, Fellah said. Clearwire officially has WiMax in only four metropolitan areas, though it has quietly upgraded some other markets. In a difficult borrowing market, it is investing very carefully, Fellah said.

"Clearwire doesn't have enough money to do what it has to do," Fellah said. The carrier said earlier this year it would reach 100 million potential customers by the end of 2010, but Fellah doubts this. He believes Clearwire is about $3 billion to $4 billion short of the $6 billion to $7 billion it will need to reach that goal, and is unlikely to make its deadline.

WiMax faces other challenges in other countries: Subscriptions in South Korea to WiBro, the local version of WiMax, fell last year before the government allowed VoIP (voice over Internet Protocol) on the network. An auction of radio spectrum for WiMax in India was delayed, and carriers are still uncertain what spectrum will be available in Russia, Fellah said.

All this matters, in part, because chip and device manufacturers need some assurance that people want to use WiMax before they put it in their products -- while, in turn, being able to buy WiMax-capable portable devices at major electronics stores should drive up demand for the networks.

But the game is far from over, according to Fellah. The votes on WiMax versus LTE aren't in yet from many cellular operators in developing countries, which could make up a big part of the global market, he said. Carriers considering LTE are worried about technological delays, interoperability among vendors and spectrum availability, the survey showed.

And as 3G data traffic in richer countries explodes, even over the next few months, carriers may need an alternative way to carry users' data traffic while the 3G networks continue to carry voice and bits, Fellah said. There are much larger spectrum bands available for WiMax than for 3G in most countries, and spectrum for LTE won't even be allocated until 2011 in some areas, such as Europe, he said.

Copyright © 2009 IDG Communications, Inc.

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