Maximising WiMAX value with fixed voice

Most WiMAX deployments around the world are focused on the provision of fixed wireless broadband access, at least in the initial years of deployment. Nonetheless, a carefully designed and implemented voice service can be an invaluable tool to enhance the value proposition of a WiMAX offering. However, it is vital to ensure that the service is of a high quality, and is perceived by customers as different from a low-value Internet telephony service.

Markets with high charges for fixed-line rental or voice calls represent an opportunity for new-entrant WiMAX operators: to offer fixed voice services with broadband access in a way that makes the overall offering more economically attractive than that of DSL competitors. WiMAX operators can offer line rental and voice charges at a significant discount to DSL competitors' PSTN voice services, whilst offering broadband connectivity at an equivalent price, or a slight premium, to the corresponding DSL offerings. Figure 1, below, illustrates this.

Figure 1: Value proposition of bundled WiMAX broadband and voice offering compared to incumbent offering [Source: Analysys]

This kind of offering can be an effective weapon in the battle for the fixed-line market. It is especially effective against incumbent DSL operators, who may be reluctant to compromise their substantial existing revenue from fixed lines by lowering line rental charges or may be precluded from doing so due to regulatory constraints.

For this approach to be successful, it is important that customers should perceive the overall WiMAX package to be as good as DSL. Whilst it is expected that WiMAX data speeds are comparable to those of low- and mid-range DSL, there is uncertainty as to whether WiMAX can compete at higher speeds. Furthermore, it is crucial for WiMAX voice services to match the quality of voice services provided over PSTN. Specifically, it is important to avoid the perception that WiMAX voice is a low-quality Internet telephony service.

This gives rise to some important implementation issues:

"¢ WiMAX voice services must have a high quality of service (QoS): voice quality should be high, and latency should be low. QoS is critical to ensuring the customer experience of the WiMAX voice service is comparable to the PSTN equivalent. WiMAX standards allow for voice to be given priority over data on the radio interface between the end user and the base station. As such, if the core network is correctly designed, voice services can be carried with a high QoS to the point of interconnection with fixed and mobile networks.

"¢ Efforts should be made to lobby the regulator for the allocation of numbers from the PSTN range. In most markets, a telephone number denotes the nature of a voice service to end users. A call to a fixed line is usually expected to be of higher quality than a call to a mobile number (or, for example, a VoIP number). A WiMAX operator should therefore lobby the regulator for the allocation of numbers from the PSTN range, rather than nomadic or VoIP-specific numbers, as has been discussed in some markets. There is both justification and precedent for this: In Pakistan, existing WiMAX voice services are allocated fixed numbers, and in Australia and the EU, fixed services are allocated fixed numbers on a technology-neutral basis. In addition, once a WiMAX operator has been granted fixed numbers, it is in a strong position to lobby for a fixed termination rate.

 

If the issues over implementation, regulation and customer perception are properly addressed, a well designed fixed-line voice service can provide a valuable complement to WiMAX broadband offerings. It can therefore be used as a useful tool to help new entrants win market share from entrenched DSL competitors.

Analysys Mason significant experience working with WiMAX operators, covering regulatory, strategy and business planning issues.