Limited WiMax growth in Australia

National broadband delivers major blow to prospects

The Asia/Pacific region can expect to be home to some 43 million WiMax subscribers by the end of 2013 and to generate estimated revenues of close to $US11 billion at a compound annual growth rate of 45 per cent (2007-2013). However, Australia will only make up two per cent of the Asia/Pacific region's WiMax subscriber base by 2013.

These findings are part of a report titled The Asia Pacific WiMax Opportunity released recently by Frost & Sullivan. The study found that WiMax holds promising potential as an alternative technology to connect underserved rural areas that will never realistically receive fixed-line services.

The sweet spot for WiMax is its ability to provide voice and data connectivity at speeds of up to 1M-bits/sec in Asia's emerging markets where a digital divide exists. This massive untapped segment is expected to drive WiMax deployments in the Asia/Pacific, despite competition from 3G technology and the regulatory issues in some countries.

Australia's prospects for WiMax recently received a major blow with the cancellation of a $US958 million subsidy for a national broadband plan, which was offered by the Australian Communications and Media Authority, to the Opel Consortium.

At the same time, Australia's wired broadband network has made leaps and bounds in the past two years as ADSL2+ rollouts have both significantly expanded coverage, service and quality. Telstra has one of the fastest 3G networks in the world up and running and has no plans to adopt WiMax in the near future. However, high broadband pricing and capacity constraints might still create a niche for some lower-end users, but given that 77 per cent of the country's households already have broadband service, the report finds fairly limited demand for the service in Australia.

The emerging markets are expected to account for almost 80 per cent (or 34.4 million) of the total subscribers in 2013, collectively contributing 69 per cent (or $US7.59 billion) to the region's total WiMax revenues given their low average revenue per.

At the end of 2007, Asia's household broadband penetration stood at 3.4 per cent. This translated to nearly 3.7 billion people in the region who have yet to adopt broadband access services -- a figure significantly higher than the world's entire mobile subscriber base. Asia/Pacific, as such, remains the best testbed for WiMax in terms of subscriber uptake and network deployments.

"In such a diverse market, the business models for WiMax will depend largely on service level uptake, as operators in emerging markets will focus on enterprise users before catering to the mass market," said Frost & Sullivan analyst Marc Einstein.

"Transition markets such as Malaysia will focus on the underserved pockets in urban areas, while operators in markets such as Japan and South Korea will drive new business models by embedding WiMax chipsets in a wide range of consumer devices, including cameras and game consoles, to pioneer WiMax-enabled mobile devices," he added.

*Len Rust is publisher of The Rust Report www.RustReport.com.au

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