Motorola has announced a contract with Wateen Telecom in Pakistan for the supply of 198,000 Wimax CPE devices for both indoor and outdoor use. Since its selection in May 2006, Motorola has been the sole supplier of mobile Wimax infrastructure and devices to Wateen Telecom. The US vendor also delivered an IMS solution to support VoIP and other value-added IP-based services.
In the same vein as the deal last week between carrier BSNL and SOMA Networks in India, this announcement reflects the potential appeal of Wimax in high-growth countries where wired infrastructure is poor. The order for almost 200,000 CPEs reflects Wateen's confidence in the rapid adoption of its Wimax services in the residential market even though it is its first year of operation. The mobile Wimax service is currently available in 22 cities in Pakistan.
Another interesting aspect of this announcement deals with the type of services to be provided using these mobile Wimax devices. Here it is not about personal broadband or mobility; it is about addressing "wireless DSL" needs. Wateen Telecom will use Motorola's Wimax devices, probably indoor CPEs, to offer basic VoIP and high-speed internet access to consumers and SMEs. More evolved data services such as VPN or video conferencing will be offered to large enterprises using predominantly outdoor devices, as line of sight will bring the benefits of more reliable links and better performance.
Even if Wateen Telecom currently delivers fixed/nomadic services, the selection of mobile Wimax (IEEE 802.16e-2005 standard) technology instead of the more mature fixed Wimax (IEEE 802.16-2004 standard) can be explained by the larger ecosystem around mobile Wimax devices. Ultimately this could lead to bigger volumes and consequently lower costs. When operating in emerging markets and targeting residential users, cost plays an even more crucial role given the low per capita income in such markets. This explains why we strongly believe that devices are key if Wimax is to succeed.
Of course, CPE is a key component in any sort of service delivery, but it is even truer for emerging technologies as they have to compete with more mature technologies that already benefit from larger economies of scale. This is why a critical driver for wider mobile Wimax adoption in particular will be the proportion of laptops that integrate Wimax chipsets. However, this is unlikely to be a significant share in the near term. In the meantime, modems and datacards will constitute the bulk of mobile Wimax devices.