First mover advantage can be good for bragging rights but in telecoms holding back to let others test markets can be a smart ploy, especially when dealing with much-hyped new technologies.  This looks to be the case for WiMax where regulators and operators in Asia are still grappling with the best way to deploy it.

 

Hong Kong has always been a proud telecoms leader (who else has 5 built out fixed-line operators!) and two years ago was setting the WiMax pace with eight potential bidders for licences. However a speedy rethink was needed  as it was shown the interference  on the C-band satellite downlink meant using 3.5Ghz band for WiMax could blackout TV sets across the territory. Now the regulator is back to the drawing board and looking to licence the 2.5Ghz band. The interference is mainly a problem in Asia where C band is widely used in satellite delivery due to the heavy rain. But this issue is now causing some serious head scratching across the region, not least because interference can travel 100km, and across borders.

 

Last week the market got a jolt when the Communications minister urged the operators to pool resources and share infrastructure and compete on services and prices. He added the cost to build WiMax could reach US$600 million and bankrupt individual operators.

 

Perhaps commercial decisions on forming alliances and profit forecasts are best left to the operators but it’s good at least to see governments looking beyond maximising spectrum licence  fees.

 

These discussions will be watched closely in China as it contemplates how best to move forward with 3G licencing and next generation wireless broadband technologies. Given the vast size of China, the sums involved are that much larger and owning 75% of the listed telecom operators, the government is acutely aware of the perils of infrastructure overbuild. Copying Hong Kong which still has operating six 2G wireless networks and four 3G is not an option.

 

Just now China has allocated the majority of its available spectrum for TD-SCDMA which looks to have put WiMax’s hopes on the backburner.  But with 3G policy in flux that could change. The WiMax supporters think they have a better chance as China puts more emphasis on a 4G type solution, perhaps even leapfrogging 3G.

 

Arguably sitting back and letting others do the running on 3G was a smart tactic. For that China probably owes some thanks to Hong Kong’s Hutchison Whampoa who have poured billions of dollars into 3G with still no convincing business case.

by Craig Stephen

Posted under Michael's Blog