Franz Büllingen, Christin-Isabel Gries, Peter Stamm
Broadband Wireless Access services in Germany - Recent developments and business models
No. 307 / March 2008
Summary
During the last years, the development of IEEE 802.16 (WiMAX) as new technical standard for broadband wireless access networks aroused high expectations. Even if today’s practical performance is well below these early expectations, WiMAX still is an interesting technology to supply areas with broadband access of more than 1 mbps at low cost. WiMAX contains quite robust security systems and supports quality of service.
Systems for Mobile WiMAX according to IEEE 802.16e which are available since 2007 use the latest modulation schemes and new antenna technology. Both very similar to those which are supposed to be used for the coming mobile communications standard LTE. Mobile WiMAX systems are not compatible with the previous Fixed WiMAX version.
Later in 2008 notebooks with integrated WiMAX chip sets are expected. Next year also mobile phones with WiMAX should be available. One of the major supporter of WiMAX is the processor manufacturer Intel. Intel intends to start supplying notebooks serially with WiMAX to initiate a push from the demand side for Mobile WiMAX services.
Until the first network roll-outs for Mobile WiMAX services, Fixed WiMAX has become a viable niche technology for broadband in formerly unsupplied regions. There are already hundreds of local WiMAX networks in Germany in rural regions as well as in OPAL/Hytas areas. They offer wireless broadband access with up to 4 mbps and telephone connections. The underlying business model is to address the existing demand for broadband in regions without DSL or Cable Internet, where a minimum of 50 to 100 customers are within the reach of one WiMAX base station. The threshold for commercial successful networks very much depends on the respective costs of backbone connections, topographic circumstances and the cost of WiMAX equipments.
In 2006, the Federal Network Agency allocated a range of frequencies for broadband wireless access at 3.5 GHz to three nationwide and two regional assignment holders. Additionally there are general assignments for 5.8 GHz frequencies. Up to now, only two of the five assignment holders show activities in rolling-out wireless broadband access networks. Much of the reluctance in rolling-out networks can be explained by the late availability of the new standard generation 802.16e. Hence a noticeable acceleration of network activities is expected for this year. If these activities are large enough and if all assignment holders will reach the provisioning obligation of 15% of all communes until the end of 2009, must be very much doubted at the moment.
Still it is also quite uncertain if wireless broadband access players in Germany will decide to start with the Mobile WiMAX business model at all. This would involve major investments, much higher than for Fixed WiMAX. Contributing factors for this decision are the future demand for mobile broadband services and the behaviour of mobile network operators regarding investment and pricing in particular.
[only a german version available]
Discussion Paper is available for download.