Voice won’t be Taiwanese WiMAX ops saving grace

Posted by Nicole McCormick Thursday, March 19th, 2009

Add a comment

The news that Taiwan’s yet to launch WiMAX licensees are badgering the National Communications Commission (NCC) to allow them to offer voice services alongside their mobile broadband offering is a sure sign that reality is dawning on the six licensees.
WiMAX operators demanding to offer voice services is nothing new, even South Korean giant KT has long argued – unsuccessfully so far - that it should be allowed to offer voice services in order to increase the attractiveness of its WiBRO network.

The problem for the Taiwanese WiMAX licensees is not just that the NCC will surely reject their request but also that in trying to change their business model at the last minute they are acknowledging they are currently doomed to failure with their current plans to launch standalone WiMAX services.
The Taiwanese government has pushed long and hard to make the country the WiMAX hub of Asia and has put huge pressure on local operators to build a strong local WiMAX market in order to help create a strong global WiMAX market to which local hardware manufacturers could sell WiMAX products.
The problem is of course – as is often the case when governments inject their own interests into the commercial world – that there always comes a point in which the commercial reality simply overwhelms the political demands of the government.
The commercial reality in Taiwan – as in the rest of the developed markets across the globe – is that WiMAX operators face a very tough – some might say impossible – task to find a successful business model against established fixed-line and mobile broadband players.
Taiwan’s WiMAX licensees are entering a market where fixed-line broadband penetration is already headed towards 80% and an incumbent player, Chunghwa Telecom, has a 90% share of the broadband market and is also beginning to rollout FTTH.
In addition, the licensees must also overcome the fact that there are already four mobile operators in the market – CHT, Taiwan Mobile, Far EasTone and Vibo Telecom - offering HSPA-based mobile broadband services.
It may well be the case that the WiMAX operators can offer much better quality mobile broadband services than those being offered by the mobile operators via HSPA – but that is not the point.
The real point is whether or not those WiMAX licensees – with marketing budgets much smaller than those available to the big four mobile operators – can persuade subscribers to buy their better quality broadband service as a standalone offering without voice.
Right now the mobile operators are offering subscribers a voice service with a satisfactory mobile broadband service thrown into the deal, with discounts offered for subs signing up to both services.
It is just very hard to see how the WiMAX operators can match this value proposition, no matter how high the quality of their WiMAX service, because most subscribers will opt for the better value proposition and the WiMAX operators simply cannot offer that at the moment.
As the old saying has it, the road to hell is paved with good intentions, and there can be little doubt that the Taiwanese government acted with the best of intentions when it set out to make the country the WiMAX hub of the region and created such a crowded local WiMAX market with six licensees.
The unfortunate fact is though that the government was taking a huge gamble when it bet the house on WiMAX and that gamble is looking less and less likely to come off every time the GSM Association announces its latest blockbuster HSPA subscriber numbers.
The truth is that even if the NCC were to allow the WiMAX licensees to offer voice services – which won’t happen as there is simply no way it can allow six new entrants into the mobile market – that the WiMAX operators would still have an incredibly difficult task breaking into the market successfully.
Even allowing for the fact that they could offer better quality broadband services than their mobile operator rivals the WiMAX operators would be massively outgunned by their HSPA rivals in terms of the number and quality of handsets and devices that they could offer to subscribers.
Regardless of what concessions the WiMAX licensees can wring from the NCC in this last gasp mercy call on the regulator there can’t be much doubt that there is only so much a government can do to subjugate the relentless power of the market before the exercise becomes futile.
In Taiwan that has been a hard earned lesson indeed.
nicole.mccormick@informa.com