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Analysys reports cellular systems to upstage WiMAX in developing countries
Posted: 07-Dec-2006 [Source: Analysys]

[Research group Analysys has published a new report stating developing countries are more likely to adopt cellular voice services than WiMAX due to "lack of PCs, low disposable incomes and the growing strength of cellular services."]

Cellular voice services will capture the limited disposable income in developing markets, undermining the business case for WiMAX, according to a new report, The Business Case for WiMAX, published by Analysys, the global advisers on telecoms, IT and media.

Many people have identified developing markets as the prime opportunity for WiMAX, given the absence of competing fixed infrastructure. However, according to report co-author, Mark Heath, "The prospects for WiMAX in developing markets will be severely limited by a lack of PCs, low disposable incomes and the growing strength of cellular services. Cellular voice services will be much more appealing to most people, particularly as handsets are available very cheaply."

Key findings from the new report include:

- Limited disposable income in developing markets places major constraints on the revenue that will be spent on telecommunications in general. For example, GDP per capita in the USA is between 7 and 25 times greater than countries such as Poland, Algeria, China, India and Pakistan

- The lack of PCs will limit demand for Internet access in developing markets. PC penetration in the USA is over 75%, compared with 6% in Bulgaria, 5% in Panama and less than 2% in India and Kenya. Cellular voice services are much more likely to be popular

- Operators will have to set service prices at low levels and bear the substantial cost of WiMAX CPE themselves, to help achieve growth. The cost of WiMAX CPE will remain high, as WiMAX will be unable to achieve the same economies of scale as cellular systems

Cellular penetration is already growing rapidly in developing markets, and taking a significant share of the limited disposable income. According to co-author, Alastair Brydon, "Mobile penetration in Pakistan rose from 9% in July 2005 to 24% in July 2006, fuelled by falling prices of handsets and services. This will provide a platform for mobile operators to develop a range of non-voice services, which will further suppress the need for WiMAX."

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