WiMAX vs 3G in Australia - Who Will Reign Supreme?

The past 18 months have seen a significant development in the use of mobile and wireless as an Internet connection technology in australia. This space was previously dominated by wireless broadband providers, such as Unwired australia and Personal Broadband australia offering pre-WiMAX solutions. However, the competitive dynamics changed dramatically in 2006 after 3G services became available from all four mobile operators, which was further accelerated by the introduction of HSDPA or 3.5G services towards the end of 2006 and at the beginning of 2007.

For the first time in 2006, the number of mobile broadband users - those using cellular-based 3G/3.5G for Internet connection - surpassed wireless broadband (pre-WiMAX) users and given current market conditions, Telsyte expects mobile broadband users to outnumber their wireless broadband counterparts by two to one in five years time.

Combined, mobile and wireless broadband users will make up 9% of all broadband users in australia in 2007. By 2011, more than one in five Australian broadband users will rely on either cellular-based or WiMAX-based technology for their high-speed Internet connection.

Delays in the commercialisation of standards-based WiMAX offerings are slowing down the growth of WiMAX in australia. That has also been exacerbated by the aggressive 3G/3.5G push by the established mobile operators, with much deeper pockets.

Telsyte believes that WiMAX still has a good chance but its window of opportunity is closing. Although wireless broadband in australia has continued to register impressive growth, expanding 68% in 2006, the user base remains small and coverage limited to major capital cities. start-up wireless broadband service providers, such as Unwired australia, BigAir and Personal Broadband australia, which operate proprietary networks, continue to face a challenging task of having to expand their coverage and recruit customers quickly while maintaining profitability. Many of them are also faced with the challenge of raising capital at the same time.

Some good news is afoot as the long-awaited standards-based WiMAX is expected to debut in the first half of 2008, which should boost market interest in wireless broadband. Standardisation should also translate into lower capex and opex for operators and cheaper CPEs for customers.

With the introduction of WiMAX delayed for almost two years and the rapid HSDPA progress made by mobile operators, WiMAXs battle against cellular-based 3/3.5G to become the wireless broadband technology of choice is becoming more difficult. Telsyte believes WiMAX has an 18-month window of opportunity until the end of 2008 to prove itself as a viable business or risk going down the path of Australias wifi hotspots, which have essentially become free services in selected locations like airport and hotel lounges or are being made free by various local and state governments.

About the Author

Warren Chaisatien is the Managing Director of Telsyte (http://www.telsyte.com.au), an Australian-based market research and consultancy specialised in the competitive intelligence of the converged communications market. Telsytes expertise is centred around the three core competency areas of Carrier & Broadband, mobile & Wireless, and enterprise communications. Telsyte provides industry insights through custom research and consulting as well as ongoing research, including market reports and online databases.

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