Market Focus
Future Perfect or Future Tense
Will 2009 change the fortunes of WiMAX in India? Or will it seal its fate?
Touted as an able alternative to cable and DSL, WiMAX (Worldwide Interoperability for Microwave Access) made some noise last year thanks to the Government of India. Despite that, the technology failed to make an impact.
This year, the Government is set to auction the spectrum for providing WiMAX services, and a number of private players are keen to build the WiMAX ecosystem. What remains to be seen is whether 2009 will be kind enough to the technology.
The story so far
Currently, the Indian broadband customer base is 5.4 million. Analysts believe that WiMAX adoption is critical to meet the target (as laid out by the Government) of 20 million broadband subscribers by 2010 .
According to Naresh Singh, Principal Research Analyst, Gartner, “India needs a wireless technology to grow its broadband subscriber base, and WiMAX is a good option for a number of ISPs who do not have another choice for last-mile connectivity.”
Being a scalable wireless access technology, WiMAX can be effectively used to bridge long distances with high data rates. A couple of leading telecom carriers, including major names such as BSNL, Tata Communications, Reliance Communications and Bharti Airtel, have begun to build a WiMAX ecosystem. The Government too is bridging the digital divide and has decided to allocate and auction WiMAX spectrum in the 2.3 and 2.5 GHz frequency bands.
Buoyed by this decision, the WiMAX Forum has predicted that the Indian WiMAX market, including devices, will be worth $13 billion by 2012. The forum is also planning to add an Indian certification lab to support certification of products in this region. Bolstered by this, private players such as Intel have also announced their plans to bring affordable low-cost devices that would help in increasing Internet access.
Possibilities and more
With WiMAX, telecom operators will have the ability to provide broadband access quickly and make inroads into markets where it has been commercially unviable due to last-mile connectivity problems.
Agrees Neeraj Gulati, MD, Ciena India, “More than 70 percent of Indian households do not have access to fixed wired telephone services (landlines). This means that providing DSL to such households is an even bigger problem. WiMAX is being looked at as a means to solve the challenge.”
The last-mile connectivity problem is acute in rural areas, and this is where WiMAX can play a significant role. Says Subashini Prabhakar, CTM, Dax Networks, “Most places in India, especially in the rural sector, lack the traditional telecom backbone infrastructure. WiMAX networks in these places will be preferred over traditional wired connectivity options.”
Besides speed of deployment, the initial costs of deploying a WiMAX network make the technology suitable for addressing rural markets. Says Dr Manoj Kanagalu, Senior Director, Wireless & VoIP Solutions, Nortel Networks, “WiMAX is the lowest cost per MB solution for offering high bandwidth connectivity for enterprises or customers over large geographic areas where there is no existing fiber or DSL infrastructure.” Nortel has already deployed WiMAX for providing connectivity for remote offices spread across hilly terrains in the north east of the country.
Adds Kiran Pande, President, ECI Telecom India, “WiMAX technology enables providers to cater to underserved markets in which the initial capex requirements must be minimal while still enabling high data throughputs to the end-users. Because the technology is pure Ethernet, the associated costs for backhauling and connectivity are much lower than for cellular or wired networks.”
“WiMAX can be a feasible option for providing backup for wired networks in case of disasters,” notes Ketan Parekh, CTO, Sharekhan. For example, in disasters caused by the tsunami in Indonesia, and Hurricane Katrina in the US, the technology was used extensively to provide communication links when the infrastructure was destroyed.
A whole new world
While WiMAX opens the door of opportunities to tap underserved markets, it also gives operators the flexibility, speed and bandwidth to provide voice, video, data and mobile services on the same platform. The range of applications that can be powered using WiMAX is extensive, and can be used for traffic monitoring, meter reading, video surveillance, distance learning, conferencing, transportation, and logistics management.
Further, long languishing applications such as IPTV can now take off with the help of WiMAX. In the past, the high amount of bandwidth required for video streaming services has acted as an impediment, making DTH satellite and cables the preferred mediums. Besides the ease and quickness of deployment, WiMAX gives operators the capability to offer more services under a common infrastructure. The service provider will have the capability to stream data at speeds of up to 10 Mbps, thus making it possible to stream videos.
Scripting a success story
To be a success in India, WiMAX has to position itself as a cost-effective and complementary technology to other technologies such as DSL. Explains Ajay Kumar Dhir, Group CIO, JSL Limited, “Price competitiveness will be a key catalyst for WiMAX adoption, hence vendors have to ensure that the high CPE (customer premise equipment) cost should not serve as a deterrent. The most powerful pricing proposition is service bundling. The more services an operator is able to layer on its network, the more valuable will be the network.”
Says Akshay Garkel, Senior Consultant, Wireless Security, “It is important that end-subscriber costs go down, and this reduction in price can only happen if economies of scale are achieved. Therefore, initially, WiMAX for home users will go through its maturity cycle and take about two or three years to replace DSL or broadband connections.” To achieve economies of scale, Garkel suggests offering free or subsidized subscriptions for the first few months, and providing WiMAX hotspots for enabling people to experience the technology.
Like any other new technology, WiMAX will go through various cycles of deployment before it is finally accepted as a mainstream and dependable technology. Says G Radhakrishna Pillai, CIO, Super Religare Laboratories, “To start experiencing WiMAX, the first choice will be remote locations or branch offices. Once we have confidence, the technology will move to other offices.”
Global players such as Alvarion, which have been instrumental in helping cellular providers such as Bharti Airtel set up a WiMAX network in India, believe that as adoption increases the usage of WiMAX will be extensive. Says Ashish Sharma, VP, Corporate Markets Development, Alvarion, “A large ecosystem of device vendors developing WiMAX devices for the global market is already present. Once a mass market is developed, we expect the devices for WiMAX to be available at price-points similar to cellphone devices.”
Mobility is the strongest point for WiMAX, and will be a significant factor in influencing adoption. Says Arun Gupta, Group CTO, Shoppers Stop, “At incremental investment over current technologies, we expect that the mobility of WiMAX will be one of the key drivers toward adoption which will help our traveling and out-of-office associates to remain connected to office productivity tools and solutions.”
Some sore points
For companies that have branch offices within the same city, WiMAX can be more cost-effective than other traditional forms of connections such as leased lines or DSL. However, within the office itself, Wi-Fi is preferred over WiMAX, hence CIOs must carefully evaluate the choices before taking a decision on WiMAX. Explains Dhir of JSL, “In areas with existing wireline infrastructure, the cost of rolling out DSL is significantly lower than setting up a WiMAX infrastructure from scratch. This is largely due to the low cost of DSL equipment and other associated infrastructure. On the other hand, the cost of setting up a WiMAX base station can be up to 1.5 times higher than enabling an exchange for DSL.”
Dhir says that DSL can reach customers within 6 km of the exchange, while practical WiMAX implementations are likely to have no more than a 3 km reach per base station leading to higher costs per square km covered. From the customer’s perspective, if speed is of the essence, then a WiMAX solution will definitely help in achieving faster rollout, especially in areas where there is lack of infrastructure.
Research firm Gartner believes that with competing technologies such as 3G available, WiMAX could be a less preferred option. Says Singh, “While there have been positive changes with respect to policy, the infrastructure for 3G is already available in the form of handsets, which is not present for WiMAX today.” He believes that WiMAX will be used primarily as an alternative to wired broadband.
Spectrum auction
For ensuring that WiMAX gets deployed as per plan, the Government has to take decisions regarding the spectrum auction sooner. For example, the dates for the spectrum allocation process were recently changed due to a request from the finance ministry to double the minimum bid prices. Though the request was rejected, it delayed the process. Resolving this issue is crucial, and the floodgates of opportunities will open only once it is resolved.
With WiMAX, India stands at the threshold of an exciting opportunity to make impressive strides in bridging the digital divide. The technology can provide connectivity to an unconnected India that has for long suffered from policies and technologies designed for economies of scale. Are we ready for WiMAX? |