Although the hype around WiMAX is quickly dissipating, we believe the standard has gained enough backing and volume to serve as an alternative for the provisioning of mobile broadband access. It has begun to carve out a tight niche tied to certain target opportunities, it has inspired a new wireless business model, and it has a flexible, flat, all-IP network architecture better suited than HSPA to providing Internet-based services. In contrast, however, the LTE standard has quickly gained substantial momentum. 

Since WiMAX 802.16e and LTE release 8 will provide similar real-world performance, ultimately the decisions of the largest WiMAX players may determine the fate of WiMAX. For example, Clearwire has been forthright about its intention to choose the technology that provides the best business case given timing and end-user demand for service quality and devices, making its commitment to WiMAX rather unclear. Will the WiMAX opportunity reach a critical point to drive vendor backing of the next iteration of WiMAX, 802.16m, which we expect will be finalized in 2010? The OFDMA architecture of both WiMAX and LTE will pave the way toward 4G networks, which as defined by the ITU-R achieve 1Gbps or more, so it is possible we will see a blending of the two standards.

This report analyzes the current WiMAX operations worldwide, evaluating operator business models, network economics and the overall market opportunity relative to UMTS/HSPA and LTE. The objective is to assess which technology delivers the most popular and profitable mobile voice, broadband and video services in the context of specific market conditions: case studies examine UQ Communications (in Japan), Clearwire (the US), Mobily (Saudi Arabia), Digicel (Caribbean), Tata (India), Umniah (Jordan) and Yota (Russia).

Key findings include:

• The number of WiMAX deployments — currently more than 500 across 145 countries — is greater than that of any conventional 3G technology and more than 50% greater than the number of HSPA network commitments. However, most WiMAX deployments to date have been small. We do expect coverage to increase: many of the larger WiMAX deployments are still underway, and large countries such as India, Indonesia and Vietnam are just beginning to issue WiMAX licenses.
• Markets with the lowest broadband penetration rates represent the most upside, and we estimate that roughly 70% of WiMAX deployments are in emerging markets, led by the Africa and Middle East region with more than a quarter of global deployments.
• WiMAX volumes are dependent on the success of only a handful of large operators, while LTE has the backing of a substantial number of heavyweights — most noticeably the largest Chinese operators. The failure of any of the largest WiMAX operators to continue with WiMAX would serve as a detrimental blow to the WiMAX community.
• WiMAX operators are increasingly open to switching to LTE when doing so is necessary and economical, but we do not expect any of them to migrate to LTE anytime before 2013. Migrating to LTE will depend on the availability of 802.16m, the vendor ecosystem supporting this standard and the need to upgrade from 802.16e in emerging markets.
• Factors driving operators to deploy WiMAX are speed to market, surgical network deployment opportunities, mobility, multiple-use scenarios, its IP architecture, and the cost of spectrum and deployment.
• Certain operators in emerging markets would benefit from bypassing 3G in favor of moving directly to LTE in a few years, although this decision will depend on factors such as spectrum resources.
• Despite HSPA’s greater scale, WiMAX USB dongles are priced competitively and even less expensive in some cases compared with other USB dongles.

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