Saturday 18 October 2008

Economic turbulence might effect funding of LTE and WiMax?

What a past few weeks we had in term of banking crises. There is no doubt that the recent turbulence in the banking sector has developed nervousness in everybody regarding the future we are going to have. I firmly believe that although the bail out has been carried by respective governments for the banks the turbulence will slip into the real economy before it starts getting better.

There is every possibility that in the near future the economic turbulence will have an impact on the funding of the projects. Some people may argue that efficient and good planning will take us through and hence the projects will not be affected. But the only question I am asking though is where the money will come from?

I do have a suspicion that as far as telecoms are concerned some of the major projects that will get affected in terms of funding will be LTE and WiMax.

We could we see analysts recalculating their projections for WiMAX and LTE soon in light of the struggling economy. There are many people out there who are putting a question mark in front of the plans that the major operators have got for LTE and WiMax. For example this week Forbes is questioning whether Sprint and the new Clearwire, which is expected to include Sprint's WiMAX network in the fold by the end of the year, can pull off a nationwide launch in a troubled economy. While Clearwire will have $3.2 billion from partners Intel, Google, Comcast, Time Warner and Brighthouse, it will need to raise an additional $2 billion to complete the network. These extra $2 billion would have been easy to generate may be a year ago but no in the current climate where there is already a shortage of money.

I am a firm believer that sometime these crises are good as this makes analysts, planning personal, designers and engineers realize to work hard and sort out the problems which they might have been complacently ignored in good times. Keeping in line with this thought, Clearwire could gain an advantage if the credit crunch lingers. Competitors AT&T and Verizon Wireless plan to deploy LTE and would likely freeze any deployments. For AT&T, such a deployment could be more than five years away as the operator doesn't seem to be in a big hurry to deploy the technology.

As I mentioned above sometimes these crises force the analysts to think hard and make sensible decisions.
For this reason I can now see that some of the companies have started taking HSPA and HSPA+ seriously which I though was always a good bet for fast mobile broadband till we get LTE. Some of operators and vendors have now reiterated their position that its HSPA and HSPA+ 3G network technology still had a lot of life left in it, and that LTE technology would not be rolled out for at least another three years and probably not on a large commercial scale for another five years.

Certainly the idea of throwing LTE on the backburner is not good for vendors that want to see operators invest in new technology soon. I am not saying this either but in the current economic climate operators and vendors can take HSPA and HSPA+ seriously do that the ARPU(average revenue per user) keep rising. If they are able to do so then the revenue generated can be used to fund the LTE/WiMax project. And once the economy starts rolling again which I’m sure will do in six months, money can pumped in heavily and vigorous plans can be drafted for LTE/WiMax.

The bigger question which arises is whether the operators can hook consumers on new technology in a tough economy. I believe they certainly can because HSPA and HSPA+ have lot to offer to consumers.

There are some analysts though which does not believe that that current economic climate will significantly impact communications usage and growth. They argue that communications are critical and relatively cheap compared to the real costly items for disposable income such as air travel, cars, home upgrades, schools, clothes, etc. They say communication revenues will probably increases and I think they might have a point here.

With the medicine provided by the governments of rich nations in terms of liquidity yet to reach to the patients, it will be a while before things start to look bit better. Let’s hope that the economy starts rolling again.

1 comment:

Unknown said...

thnks for info, i wrote a little about this in lithuanian language.