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There is, of course, the possibility of using WiMAX to fill the gaps in areas where wireline broadband access is not feasible or for an operator looking to provide something rather different such as city-wide solutions to the public sector. Nonetheless, to compete head-on with DSL would really mean offering the same service using a different technology.
WiMAX can be deployed profitably in many ways and with various business models, but there are typically three broad business models which are central to this technology: last mile, backhaul and metro access network models are the basic premise from which various other business models are derived.
Last mile access - with a personal touch
As total Internet access subscriber rates rise by leaps and bounds each year, service providers of all sizes and kinds are facing a common challenge: differentiation of service offering in a competitive market. Further, providers must address customer demand for quick service delivery and high-speed network access at a low cost. The price associated with customer acquisition costs and ongoing last-mile maintenance puts pressure on service providers to find new ways to cost-effectively deploy differentiated Internet access services to large numbers of customers.
WiMAX gives wireless ISPs and DSL/cable providers today’s fastest pathway to new markets and revenue. Whether well established and looking to expand or smaller and newly established, service providers of all types can immediately and cost-effectively create networks or reach out from established points-of-presence to capture new customers.
ECONOMICS OF WiMAX
Without the delays and costs of leasing or building a wired infrastructure, BWA networks allow secure and reliable access to high-speed data, voice and video services. Internet access can be extended to business parks, apartment complexes, school districts and even rural communities several miles/kilometers away - all in a matter of days.
Further WiMAX operators are going to offer fixed competition to drive asset utilization up to the necessary levels, but the new opportunity is to provide personal broadband, or, in other words, ‘broadband that goes with you’ (Figure 8.14).
Personal broadband does not necessarily require the kind of truly mobile broadband connection that would support, for instance, an Internet connection with a fast (multi-Mbps) throughput while the user is travelling on a high-speed train. For such personal broadband use,
Figure 8.14 Personal broadband
WiMAX BUSINESS MODELS
urban commercial users (the majority of the market) will mainly require in-building broadband coverage and a portable connection that is available to a user while walking or in a slow-moving vehicle.
There are well-known market niches for personal broadband, particularly amongst small business owners and, of course, ‘road warriors’. However, while these are well-understood and attractive niche markets (where WiMAX should have clear advantages of speed and simplicity over 3 G technologies), ultimately the most interesting area will be in the new markets opened up by wide area wireless broadband. Putting the ‘ether’ back into Ethernet by restoring it to a wireless connection is likely to create unpredictable changes in the ways in which broadband is used.
Just as the mobile phone now generates more voice revenue than the fixed network in many countries, would it not also be possible, at least eventually, for wireless broadband revenues to exceed those of wireline broadband, if it were simple and cheap enough?
For example, for in-vehicle entertainment, flexible CCTV and security systems, WiMAX devices could represent a user’s second or third broadband connection. This situation is entirely feasible - one should remember the time when nobody believed that mobile penetration would exceed 100 %!
Similarly, personal broadband could provide a facility for voice over wireless broadband that would act as a pseudo-mobile service, which could prove attractive for certain market segments. Personal broadband could prove disruptive to these and other existing markets in the long term.
Ethernet economics - the general and rapid improvement in the cost performance of Ethernet devices and systems - has often surprised the telecoms industry, and WiMAX looks set to provide the next example over the next few years.
Delivery of a broadband service to customers depends not only on the broadband access network, the so-called ‘last mile’, but also on a means of connection to the mainline or backbone networks that forms part of national and international data transmission networks. This connection is known as backhaul and has been called the ‘middle mile’. Backhaul is a significant issue, since high-capacity networks are normally found in large towns, and obtaining connection to them is a substantial factor in
ECONOMICS OF WiMAX
the cost of rural broadband services. Backhaul to the nearest available main network node can be addressed by a variety of technologies: