Frost: Broadband Market Maturity Offers Opportunities for Latin America WiMAX Providers
February 5, 2008 // Published as a news service by IHS
In comparison, the number of worldwide interoperability for microwave access (WiMAX) subscribers in the region does not surpass a few thousand.
Electronics & Telecom Standards Collections IEC Standards News Electronics & Telecom Standards As a result, WiMAX adoption is expected grow at a highly attractive compound annual growth rate (CAGR) of 97.7% between 2006 and 2012.
Recent analysis from Frost & Sullivan of the Latin American WiMAX market found it comprised only 20,700 subscribers in 2006, but estimates it will reach 1.2 million in 2012.
"Operators are increasingly resorting to WiMAX, as it significantly reduces the cost of deploying a broadband network, either to expand its capability or to reach underserved areas," said Ignacio Perrone, team leader for the telecom services group at Frost & Sullivan.
"Other drivers include portability and the potential for multiple devices."
For entrants, WiMAX can be a great opportunity to overcome distribution issues, which is the most significant barrier to market entry. Analysts said WiMAX offers the possibility of reaching a large number of clients without having to invest in expensive wired infrastructure.
Since the number of voice services is significantly decreasing every year, broadband providers based on digital subscriber line (DSL) are looking for new technologies to maintain their position in the market. Analysts said WiMAX provides a good opportunity to follow the current global mobility trend.
WiMAX implies a long-term view for mobile operators and the primary reason for a mobile operator to be interested in this technology is to start preparing to offer voice over Internet protocol (VoIP) services, in what may be an inevitable trend. Analysts said since global system for mobile communication (GSM) and code division multiple access (CDMA) technologies are proving inefficient for data services, WiMAX would allow them to achieve high data transmission speeds.
Notwithstanding these drivers, analysts said the major restraints for WiMAX include the high cost of customer premise equipment (CPE), its inability to support advanced services such as Internet protocol television (IPTV) because it is a shared resource and the lack of defined standards, among others. A delay in the frequency licensing process in countries such as Brazil and Mexico is also proving a barrier to WiMAX expansion.
"In Brazil, the regulatory body Anatel is likely to open a bidding process to distribute new WiMAX frequencies to telecom companies," said Perrone. "Although the bidding was scheduled to take place in 2006, Anatel's decision to prohibit the incumbents from participating in the auction, since they already offer DSL, resulted in a judicial case that is still being tried in the Brazilian courts."
Analysts said Argentina is the country with the most favorable elements for the deployment of WiMAX. This market is divided between two incumbents - Telecom Argentina (owned by Telecom Italia), which is responsible for the Northern half of the country and Telefónica, which is responsible for the Southern half. The country's telecom regulation does not allow unbundling, making the entrance of new competitors an expensive venture.
Source: Frost & Sullivan.