Sunday, August 22, 2010

The Economics of 4G WiMAX

The benefits, from an access perspective, of WiMAX, are evident — it brings a new combination of access, mobility, speed, and reliability to the game. As with any technology, however, the question, now that that the WiMAX standard has been defined and is being implemented by providers and equipment vendors, is what is the value proposition? Who will pay for it, and how much will it cost? How will WiMAX costs compare to other broadband access services?

First, initial WiMAX deployment costs are going to be substantially reduced, since there is no fiber to be run to each subscriber, as there is in xTTH deployments. DSL providers have the inherent advantage of having the access lines already laid, so the difference there is a bit less — WiMAX deployment will cost between one-eighth and one-quarter the cost for DSL deployment per home passed.

As for other wireless alternatives, like 3G, 3.5G, and 4G, the number is similar — WiMAX will cost about 16 percent of the cost of other cellular-based broadband, largely because it will require fewer towers. Those are the closest comparisons. When compared to cable and FTTH deployments, WiMAX costs should come in under one percent of either alternative.

These deployment economics alone should be cause for concern for landline operators that could see WiMAX providers enter the market with considerably lower CAPEX. That is, of course, assuming they can get subscribers to pay for the service — after all, they’re not about to build WiMAX towers without a plan for revenue generation.


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