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3G to remain more expensive than WiMAX

Posted: 02 Mar 2007 ?? ?Print Version ?Bookmark and Share

Keywords:3G? WiMAX? wireless technology? mobile WiMAX? LTE?

WiMAX spectrum is set to get more expensive as regulators in different countries start releasing lower frequencies to be used for the mobile version of the broadband access technology. The prediction, from analysis group Pyramid Research, comes in a report that also suggests 3G cellullar spectrum will remain significantly more expensive for operators than mobile WiMAX.

The report notes that in some cases spectrum for WiMAX has been less than one thousandth of the cost of 3G for a specific geographic area. It notes that a correlation exists between the price per MHz per person and the GDP per capita of the country in which the license is used.

In India, Brazil and Ukraine, where GDP per capita is low, the price per MHz per person is less than 1 cent. By comparison, in countries with high GDP per capita, such as the United Kingdom and Germany, the price per MHz per person is slightly over 1 cent, while in the United States it is greater than 3 cents.

Dan Locke, analyst at Pyramid responsible for the report, said that bidders for WiMAX spectrum to date in most cases have been smaller players, with large mobile operators remaining faithful to the cellular technology roadmap.

In his analysis of why 3G spectrum has been more expensive, Locke argues that while licensing for cellular frequencies was on a national basis, WiMAX licenses have primarily been issued on a regional basis, and the players with the deeper pockets will typically focus on the more attractive areas, impacting country level averages.

"Deep pocketed MNOs have long felt that owning 3G spectrum was central to their strategic future. Few feel the same about WiMAX or are willing to enter yet another expensive auction," he said.

He suggests heavyweight interest could push up the price as network operators and MNO's take bidding for mobile WiMAX spectrum more seriously, if only for defensive reasons.

The sharpest difference in spectrum pricing is the case of the U.K. where, for instance in the Greater London region, the price per MHz per population for the 3.5GHz license for Fixed Wireless Access in an auction was 500 times less than in the 3G license auction, which, admittedly, broke all records.

Locke notes that similar differentials apply in other Western Europe markets, where 3G spectrum was sold at high prices.

During a panel session at the 3GSM world Congress in Barcelona earlier this month, Vodafone CEO Arun Sarin warned that operators need to pull together more efficiently to avoid the threat posed by WiMAX.

He called on the industry to work faster on its plans for Long Term Evolution (LTE), the next generation cellular technology being readied by the 3GPP initiative, but also hinted at the need to consider new technologies.

"LTE is still at the standards stage, while WiMAX is a commercial reality," he said, but added the proviso that the technology "is still some distance away from being prime time."

- John Walko
EE Times Europe

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