Experts question business case for WiMax

There may be very few situations in which WiMax has a secure long-term business case, new research warned today.

A study by Analysys suggests that investing in WiMax is likely to be fraught with uncertainty.

Alastair Brydon, the report's co-author, said: "WiMax operators and investors will have to select their targets with extreme care.

"Small returns in many situations, from low ARPU or take-up, make high upfront investments in network infrastructure, marketing and customer premises equipment highly risky."

Even in emerging countries with low penetrations of fixed network infrastructure and services, the business case for WiMax will still be difficult to justify.

Low disposable incomes, low penetration of PCs and the growing strength of cellular services are all cited in the study as limiting potential returns from WiMax.

There is an opportunity, in principle at least, to make a healthy profit from WiMax in rural areas of developed markets which are not served by DSL or cable services, according to the research.

However, with fixed operators rapidly extending the reach of DSL, such opportunities are likely to be few in number and limited in size.

In addition, head-to-head competition with fixed broadband services in developed markets would require a "spectacular performance" by a WiMax operator to overcome the growing capabilities and services on offer, such as IPTV.

"Developing markets are often cited as the prime opportunity for WiMax networks, but voice telephony will be important to end users in these markets and cellular services have already gained a strong foothold, fuelled by the availability of cheap handsets," said report co-author Mark Heath.

"Furthermore, WiMax businesses in rural areas of developed markets will face serious difficulty if DSL subsequently becomes available."