Over the week of  November 22nd I had the opportunity to speak at the “WiMAX Forum Southeast Asia Regional Focus 2010” in Kuala Lumpur, Malaysia. The conference was co-organised by Beacon Events, MIMOS, Packet One Networks, SIRIM, and YTL Communications. The event was endorsed by the WiMAX Forum and supported by the Ministry of Science, Technology and Innovation of Malaysia (MOSTI), and the Malaysian Communications and Multimedia Commission (MCMC).  Over 280 delegates (34% operators, 30% vendors and 36% others) registered to participate in the event. The vendor community was represented by Samsung, Agilent, Intel, Elitecore Technologies, Green Packet, ZTE, Tellabs, and others. 

During the conference there was much discussion about the evolution of the WiMAX ecosystem – future development and growth opportunities. Heavyweights like Packet One, UQ Communications and promising new entrant YTL Communications shared their experiences and plans. The latter in particular caught my attention. YTL launched its “YES” 4G service on November 19th with 65% coverage in Malaysia. I saw the “YES” brand everywhere (on the streets, trains, airport, shopping malls, etc.) in Kuala Lumpur. The service offers a pay-as-you-use structure of 9 sen (US$0.03) per 3 MB/1 minute of voice calls/1 SMS message. YTL is expected to instigate a price war given that its bundled all-in-one tariff (voice, data and SMS) is significantly below its current Malaysian competitors. 

Packet One (P1) is moving ahead with WiMAX at an accelerated pace and expects to reach 280K WiMAX subscribers by the end of thiss year. It had 218K WiMAX subscribers at the end of Q3 2010. For P1, the usage has grown from 9 GB per subscriber per month in Q2 2010 to 10 GB per subscriber per month in Q3 2010. Video downloads account for 37% of P1 subscribers’ online activity. In the span of less than a year, P1’s average monthly data usage per subscriber has increased by about 30%.

Packet One’s biggest challenge has always been the need to accelerate growth. It needs to add capacity and increase coverage to better serve its customers. The challenge is to retain customers who move to other locations in Malaysia where P1 does not have adequate coverage. The main reason for the company’s churn rate is this coverage problem. However, churn is still well below the industry average in Malaysia of 5%. To counter churn P1 plans to extend coverage to 45% of the Malaysian population by the end of 2010, compared to the end of 2009 when it covered less than 35%.

There were several speakers at the conference who provided an update on the Indonesian telecom market and the WiMAX deployment progress in that country. First Media became the first Indonesian operator to launch WiMAX services at the end of June 2010 (2.3 GHz licenses were awarded in 2009 – license holders must deploy 802.16d equipment). WiMAX’s progress in Indonesia has been held back by a ban on the mobile version of the technology. This situation is expected to be reversed as the regulator is considering changing its rules to allow existing WiMAX operators to upgrade to the 802.16e-2005 standard. This will bring operators into the wider device ecosystem. Since the 2.3 GHz licenses were awarded operators have been lobbying to have the mandate for 802.16d in that band removed. They also want the regulator to accelerate the process for releasing spectrum in the 2.5 GHz band. 

The 2.5 GHz band is fully utilized for BSS (Broadcast Satellite Services) in Indonesia. POSTEL, the national telecom regulator, is currently studying how to optimize this band for possible use of BWA (regardless of network type – LTE or WiMAX). It is also studying the use of LTE in the 700 MHz band, however this band will not be available before 2018. The only feasible LTE implementation is spectrum refarming in 900 MHz/1800 MHz (and 2.1 GHz UMTS band) currently in use by GSM/HSDPA operators.

During the conference there was also a discussion of 802.16m vs. TD-LTE. It is reasonable to expect a mature TD-LTE ecosystem evolving in 2012 for commercial deployments. In order to compete with the LTE handover, WiMAX operators can consider the option of 802.16m migration, which also has an added advantage of reusing existing devices. UQ Communications, for example, is expecting to deploy WiMAX 2 (formally 802.16m) in 2012, although due to a lack of suffiecient spectrum it has yet to announce any formal decision. 

UQ believes that 30 MHz in the 2.5 GHz band is not enough for WiMAX 2. It can deploy 802.16m even in the existing 30 MHz. However when it starts providing higher speeds the volume of the traffic will naturally grow, and it will require more capacity. UQ has approached the Japanese government for 20-30 MHz of additional spectrum, which it hopes to obtain in 2011. Fortunately for UQ, 30 MHz of spectrum in the 2.5 GHz band was freed after satellite mobile broadcasting services were shut down last year in Japan.

P1 is currently looking at both 802.16m and TD-LTE. It anticipates it would take another two to three years for WiMAX 2 or LTE advanced deployment considering the readiness of the technologies and ecosystems. By that time P1 is expected to be cashflow positive. It will be prepared to invest manageable incremental CAPEX as it had already planned for in its technology roadmap.

Despite the time-to-market advantage that WiMAX has over LTE, Maravedis believes that LTE ecosystem will develop more rapidly than the WiMAX ecosystem. The wider availability of devices will be of course a threat for WiMAX operators competing with LTE. WiMAX remains a viable alternative for broadband connectivity, particularly where migration to full mobility is not expected. While the issue of migration to LTE equipment is being met, operators must still consider how the subscriber device base can be converted. The use of multiple-mode WiMAX/LTE device is an option now worth considering.

MARAVEDIS is a leading analyst firm focusing on disruptive technologies including smart networks using WiMAX, IEEE and 3GPP/LTE.

Author: Basharat Ashai, Market Analyst, APAC & MEA