Wimax may yet find success in emerging markets

By Niclas Mika

AMSTERDAM, June 18 (Reuters) - Wimax, the wireless broadband technology, may find its place serving emerging markets without a fixed-line infrastructure rather than providing blanket coverage in industrialised countries.

At a Wimax congress in Amsterdam, executives said the technology had potential in emerging markets -- Africa, for instance, has only 35 million fixed telephone lines for almost a billion people -- but also in rural areas of industrialised countries with poor wired broadband service.

"Wimax serves the richest of the rich and the poorest of poor," Kevin Suitor, Vice President Marketing and Business development of Wimax equipment maker Redline Communications (RDL.TO) told Reuters.

The Wimax Forum, the main industry group, estimated that about 3.6 million people worldwide used Wimax last year, a tiny figure compared with the roughly 200 million users of third-generation mobile phone networks that also offer wireless Internet access.

But the Wimax Forum forecasts that the number of subscribers will grow to 100 million by 2012.

Analysts, however, are sceptical of industry claims that Wimax also has a bright future providing urban users in industrialised countries with mobile Internet access -- areas already well-served by mobile networks whose operators will likely use competing technology LTE to upgrade.

Analysts note that building a Wimax network in developed countries is akin to launching a new mobile operator, with many costs -- such as the acquisition of sites for base stations and the core network -- similar to those a mobile carrier incurs.

Big-spending business customers will likely wait as Wimax networks initially have limited coverage and operators will need time to offer roaming access abroad.

"The only real market opportunities we are seeing are in emerging markets lacking wired infrastructure, or in rural areas of developed countries," said Pierre Carbonne, consultant for mobile technologies at Idate.

SHARPER FOCUS

As previous expensive forays into new technologies have shown -- such as the billions of euros spent by European carriers to acquire licences for third-generation mobile phone networks -- sound business cases are crucial to success.

Offers with a sharp focus could be successful in developed countries, Redline's Suitor said.

Suitor said a typical Wimax network in Africa to cover a dozen cities may cost about $20 million to build and could break even after four to five years with less than 1 percent of the total population of the country taking up the service.

Carriers pursuing narrower goals, such as plugging a gap in their service offering, could break even after as little as six months, he said.