Niche WiMAX technology will garner only about 5 percent of 1.5 billion global mobile broadband connections

The potential of WiMAX appears to be losing steam. What started few years back with WiMAX seen as a potential threat to 3G services seems to be a thing of the past with recent trends working against the adoption of the technology.

A research conducted by a telecom research firm, Ovum states that WiMAX at best will remain a niche technology. The cost of customer equipment is the main barrier towards adoption of WiMAX technology where DSL and HSPA score over it banked on greater economies of scale. On a non-subsidized basis, it is currently priced and positioned as a broadband option only for businesses or wealthy consumers.

According to the research, HSPA will be the dominant technology in emerging markets for the next five years, accounting for two thirds of next-generation access connections in 2014. The opportunity for mobile WiMAX in emerging markets is certainly greater than in developed markets, but the more rapid adoption of LTE will see the two next-generation technologies almost on parity by 2014. WiMAX sector will consolidate over the next two to three years. Independent WiMAX operators will either be acquired by big players or exit the business altogether. Over two-thirds of the over 300 WiMAX networks across the globe are in emerging markets of Africa, Asia, Eastern Europe, Middle East and Latin America. Unlike the original targets by these operators of roping in hundreds of thousands of subscribers for WiMAX services the real situation is that they have hardly thousands or tens of thousands of subscribers.

WiMAX will end up with just 5 percent of the 1.5 billion total global mobile broadband connections by 2014. WiMAX coverage will remain mostly in large urban centers where it will compete against DSL, HSPA/EV-DO and in some cases fiber services.

Mobile data and emerging markets are key to continued growth

A research conducted by Analysys Mason forecasts that the worldwide telecom market will grow at a CAGR of 6 percent to reach USD 2.4 trillion in revenue in 2013. This growth will be driven by mobile data services. Communication service providers (CSPs) are launching 3G networks in many emerging markets, such as China and India, and LTE technology will become available in most mature markets during the next few years. Analysys Mason predicts that mobile data traffic will grow at a CAGR of 131 percent through 2013.While mobile data presents the greatest revenue opportunity for operators; it could also be their biggest challenge. They must find ways to monetize that traffic so that all of the value does not go to device manufacturers, such as Apple and Nokia, and content owners.

The research shows that CSPs have managed their costs successfully in a difficult environment. The global telecom services market grew by 5 percent in 2008 to reach USD 1.8 trillion in revenue, despite the economic downturn. Even more encouraging was the year-on-year growth in EBITDA, which stood at a very impressive 10 percent.

Mobile services continue to be the leading source of revenue. Mobile voice services accounted for 36 percent of global service revenue in 2008, and mobile data services accounted for 10 percent, while traditional voice services represented only 21 percent. There are more than twice as many mobile subscribers in the world as there are traditional voice lines–4 billion versus 2 billion. In emerging markets, mobile services tend to account for an even larger share of service revenue–up to 58 percent, in some cases.