Technology | Media | Telecommunications

Tuesday, April 01, 2008

Vertical Markets for WiMAX Service Providers

According to the latest market study by Senza Fili, the attention of WiMAX operators is on both business and residential subscribers. Will they embrace mobile broadband with the same enthusiasm they have shown for cellular voice? How much are they willing to pay for it? Which devices will they use?

Most of the business models employed by WiMAX operators do not prioritize -- or even contemplate -- vertical markets such as transportation, utilities, health, education, safety. In fact these sectors are often seen as a distraction or a niche. Many operators devote all their resources to the business and consumer markets and plan to address vertical markets on an as-needed basis, or at a later stage when the network is completed and business and consumer acquisition is well under way.

Vertical players have just started to assess the WiMAX opportunity and still have to quantify the potential cost benefits and performance advantages, as few commercial WIMAX networks are available to conduct their analysis.

Traditionally, vertical markets have played a very limited role in cellular networks. Voice services have a dominant role, as they provide the bulk of revenues and, even more importantly, profits. As a result, voice traffic has priority and takes up most of the capacity on cellular networks.

If you add some data traffic from business and consumer subscribers, there is little network capacity available left for vertical applications. Vertical markets are by definition more fragmented and therefore operators need to put in more effort to address their requirements. In this context, it is not surprising the operators have paid little attention to vertical applications.

WiMAX -- and LTE when it's commercially available -- have the potential to change this. They support true wireless broadband networks: the wider channels and improved spectral efficiency bring the operator higher capacity.

Operators may end up with more capacity than they need to meet the demand from mobile and fixed subscribers, especially in the early deployment stage, when they need broad coverage but they are still in the initial client acquisition phase.

Without being encumbered by the requirement to support large volumes of voice traffic, WiMAX operators can finally turn their attention to vertical markets. In doing so they will discover that enterprises can bring in additional revenues to help pay back their hefty initial capital outlays for the network buildout.