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WiMAX market comes under pressure

01 октября 2008

The credit crunch is likely to curtail investment in WiMAX networks and hasten the demise of a swathe of WiMAX vendors, according to Lee Sparkman, CEO of Russian WiMAX operator Enforta.

A credit lock-down is likely to hit WiMAX operators particularly hard because many are building broadband networks on greenfield sites, contends Sparkman. This means operators may have neither the customers nor the cash flow to guarantee their capital-intensive network and business development plans.

"This [the financial crisis] will definitely have an impact on the WiMAX industry.
So many of the operators are Greenfield," said Sparkman.

WiMAX operators also face the prospect of their equipment vendors going bust, given that many of WiMAX suppliers are relatively small scale.

"Combine [the capital-intensive nature of the business] with the fact that there are sixty-odd vendors and the supply chain risk is extraordinarily high," says Sparkman.

As a result, Sparkman believes the WiMAX equipment market is set to consolidate more quickly.

"I would expect to see a shake out of at least a third [of vendors].
This [current financial crisis] will just accelerate it," said Sparkman.

However, he added that the arrival of WiMAX equipment based on the 802.16e standard will reduce the risk for operators of being left high and dry if their suppliers go out of business, since it will offer the possibility of more easily switching to an alternative vendor.
"802.16e has greater interoperability, which de-risks the supply chain," said Sparkman.

He also argued that the interoperability the 802.16e standard brings will reduce the cost of equipment for operators that already have funding, as well as their customers.

"There has been some reluctance with operators and [customers] to pick up WiMAX, but [802.16]e changes things dramatically," he said.

Enforta - whose financial backers are Sumitomo Corporation, Baring Vostok, the European Bank for Reconstruction and Development and Bessemer Venture Partners - will complete building a fixed WiMAX network in 68 Russian cities by the end of this year, where it has 22,000 corporate accounts to which it provides broadband access and IT services.

Источник: Total Telecom

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