The Wireless Broadband Business Case: Focus On Mobility

from the what-are-you-selling? dept

Tue, Jun 28th 2005 10:40am — Mike Masnick

While it does seem like the Brand X decision should lead to more interest in wireless broadband solutions, there are still many questions not just about the technology, but the business models to support the technology. While Intel keeps pushing WiMax as a potential DSL replacement, it's not clear that's going to be the best strategy for creating a strong business model for the technology. This quick look at the business cases for WiMax points out the competing factors in creating a profitable service. According to the article, you need two things: a large under-served market and high average revenue per user (ARPU). That doesn't work if you're going after the DSL replacement market. In most areas, the market may be more mature and somewhat saturated, and especially in places with competition from cable, the prices are getting cheaper -- so high ARPUs are unlikely to impossible. The article suggests that wireless broadband providers focus on value added services like VoIP to push up the ARPU, but unless you do value decreasing things like blocking competitive VoIP people can just go elsewhere. At the same time, these high bandwidth apps cause another problem for wireless broadband solutions, in that they eat up capacity on a wireless tower -- an issue not really faced by DSL. So, what can wireless broadband do to make the case? The real answer is to avoid this mess by redefining the market away from competing with DSL. The big advantage that a true mobile broadband solution has (not WiMax -- or, at least, not WiMax for a few more years) is always-on mobility. It's the fact that you can take your broadband with you. That lets people do stuff that they simply couldn't do with their DSL connection. So, even if it ends up replacing DSL, the positioning needs to move away from just "DSL replacement" towards the additional benefits that a mobile broadband solution supplies.

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Stefan Stanislawski, 28 Jun 2005 @ 10:40am

WiMAX and mobility
I absolutely agree - in almost all of Europe there is no purely fixed market whatsoever for WiMAX and I have been saying this to anyone in the WiMAX community that will listen for about 18 months. Many now agree. Check out Unwired in Australia for how it should be done.
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Michael Finneran, 28 Jun 2005 @ 10:40am

Don't trust dummies with calculators!
The payback computation and population density example assumes a WiMax base station covers 1 square Km! WiMax cells will have a radius of around 5 miles (8 Km) which works out to 200 square Km. Using the 100 potential subscribers per square Km density, the 52 subscribers required would be 0.3%.
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Phil Lorch, 28 Jun 2005 @ 10:40am

Wimax as a replacement for DSL
We also really need to think about the ease of setup and use-model issues that a person would face when setting up a Wimax (fixed or mobile) link at home or on the road. DSL has become pretty foolproof IMHO. WiMax after-market installation would need to be pretty easy, and inexpensive to have a shot at displacing DSL, or cable modem for that matter. Having said that, if you think out into the future a few years, when we may be looking for much faster connection speeds than what DSL or even cable can provide, then considering Wimax as a replacement or as an alternative to the next level of wired connectivity: fiber to the curb or fiber to the home is indeed realistic. For mobile broadband users, DSL and other tethered technologies are a no go, of course. So there I think Wimax mobile (802.16e) will be attractive, especially if it proves to perform well in non-line of sight situations that are typically encountered by mobile laptop and PDA users. The same questions exist here however, will it replace the incumbent wireless 3G technologies such as 1x-EVDO and HSDPA? Whether for fixed or mobile applications, the keys for wi-max adoption will boil down to: acquisition and on-going costs of the service, and ease of setup/speed and on-going link reliability. If the technology addresses these points well, and users really do need all the bandwidth, it does have the potential to become ubiquitous, both for fixed and mobile users. But it will not happen overnight. -Phil Lorch
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