WiMAX will have 103 million subscribers by 2013, but HSPA will have more

WiMAX is a tale of two markets – one being WiMAX as an emerging technologygaining significant momentum in the last year, and the other being thelarger converging broadband market, where the runaway success of rivalmobile broadband system HSDPA and the acceleration of LTE threatens theopportunity for WiMAX in some markets.

“It’s the best and worst of times for WiMAX,” says Mike Roberts,principal analyst at Informa Telecoms & Media and author of WiMAX BroadbandConvergence: Emerging Fixed, Portable & Mobile Internet Markets – 2ndEdition, a new strategic report with uniquely comprehensive forecasts on themarket opportunity for WiMAX.

It’s the best of times because the WiMAX industry has undoubtedly gainedsignificant momentum in the last year, passing a string of key milestonesincluding product certification, the launch of services by major operatorssuch as Sprint Nextel, commitments to WiMAX by key Internet players such asGoogle, and the long-awaited arrival of WiMAX notebooks and other devices.

WiMAX is also starting to take off in key emerging markets. “In many majoremerging markets all the pieces are falling into place for WiMAX, includingavailability of spectrum, huge pent-up demand for broadband, certificationof Mobile WiMAX equipment, and the arrival of new lower-cost devices such asultra-portable notebooks and netbooks,” says Roberts. “For example ourforecasts show that WiMAX will account for 24% of India’s total broadbandsubscribers by 2013, up from 7% in 2008.”

But despite these successes, it’s also the worst of times for WiMAX becauseits rival HSDPA has become a runaway success in many markets worldwide, andemerging rival LTE has accelerated and gained the backing of most of theworld’s major mobile operators, including Vodafone and China Mobile.

“The converging broadband market has changed dramatically in the last yeardue to the rise of HSDPA and the acceleration of LTE,” says Roberts.“There’s no doubt that Mobile WiMAX has come of age in the last year withthe launch of major new services such as Sprint’s Xohm, but it now faces atough fight with HSDPA and eventually LTE in key markets. As a result, manyWiMAX vendors and operators need to reshape their strategies.”

For example Mobile WiMAX pioneer KT had 200,000 WiBro subscribers at the endof May 2008, well below expectations given the service launched in June 2006and was expanded significantly by May 2007, according to one of the detailedWiMAX operator case studies in WiMAX Broadband Convergence. In contrast KT’s mobile arm KTF launched HSDPA services in March 2007 and had 4.8 millionsubscribers by March 2008.

“KT may be a special case since it launched Mobile WiMAX services so earlyinto such a competitive broadband market,” Roberts says. “But the verydifferent performance of Mobile WiMAX and HSDPA in Korea shows thechallenges WiMAX faces in some major developed markets. To overcome thechallenges and gain traction in fiercely competitive markets, operators willhave to use WiMAX as a platform for innovative new business models, devices,applications and services.”

Mobile WiMAX also faces challenges because is entering its capital-intensivedeployment phase in the midst of the global financial crisis, which willmake it harder for operators to secure funding for new deployments. “Someoperators such as the new Clearwire are already well funded, but for otherWiMAX operators still looking for capital it’s a very tough time,” Robertssays. “Of course the credit crisis could also delay investments in rivalsystems, but HSDPA is already widely deployed and LTE deployments won’tstart until 2010.”

WiMAX Broadband Convergence finds significant opportunities for WiMAX inmany regions and market segments worldwide, but in others it will struggleto compete with HSDPA and other broadband systems. “It’s the best of timesfor WiMAX because it has come of age in the last year and is taking off insome key markets, which will lead to 103 million WiMAX subscribers worldwideby 2013,” Roberts says. “But in the context of the global convergingbroadband market it’s also the worst of times for WiMAX because its rivalHSPA is truly booming and will have more than 1 billion subscribersworldwide by 2013, more than ten times as many as WiMAX.”

However Mobile WiMAX still has a significant head-start over its OFDMA rivalLTE, which will launch commercially in 2010. “The result is that WiMAX willbe the leading next-generation mobile broadband system in 2013, withsignificantly more subscribers than LTE,” Roberts says.

“The bottom line is that WiMAX will take a significant share of theconverging broadband market in some regions, but will struggle in others dueto competition from HSPA and LTE,” Roberts says. “WiMAX operators andvendors need to understand the new market realities to make sure they’re onthe right track.”