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Two Reasons WiMAX Will Beat 3G on Price

WiMAX spectrum has been significantly cheaper than 3G spectrum; in some cases, WiMAX spectrum has been less than one-thousandth of the cost of 3G spectrum for a given geographic area, according to a market study by Pyramid Research.

In the UK's 3G spectrum auction of 2000, mobile operator Vodafone paid a whopping $9.4 billion for a 30 MHz national license. This is in sharp contrast to what was paid for a regional 3.5GHz license in a Fixed Wireless Access (FWA) auction three years later.

The most expensive license in this auction ($3.2 million) covered Greater London, one of the denser regions in the UK. The price per MHz per population for the 3G license was about 500 times higher than the price per MHz per population for a Greater London WiMAX license.

Similar differentials apply in other Western Europe markets, where 3G spectrum was sold at high prices. "Deep-pocketed MNOs have long felt that owning 3G spectrum was central to their strategic future. Few feel the same about WiMAX or are willing to enter yet another expensive auction."

3G spectrum has been more expensive than WiMAX spectrum for a number of key reasons:

- WiMAX licenses have primarily been issued on a regional basis, and the players with the deeper pockets will typically focus on the more attractive areas, impacting country level averages.

- Bidders for WiMAX spectrum to date have mainly been smaller-size players, with large MNOs remaining faithful to the cellular technology road-map.

However, WiMAX spectrum is about to get a lot more expensive as more government regulators release lower frequencies to be used for mobile WiMAX, because those bands enable an increase in traffic capacity without the need for additional base stations.

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