WiMAX Business Models: Will New Networks Ever Become Profitable?

• Table of contents
• Table of exhibits
• Acronyms and abbreviations
• Companies mentioned in this report
• Executive summary

Section 1: Emerging WiMAX business models

• 1.1 Alternative operators choose WiMAX for speed of deployment and low cost
  • CASE STUDY: TransTelecom looks for competitive advantage in WiMAX
  • CASE STUDY: Clearwire' s laser-sharp focus on rural markets pays off
• 1.2 Fixed-network operator business models: An alternative primarily where DSL does not go
  • CASE STUDY: Fixed WiMAX finds a home in the Middle East
  • For emerging markets, mobile WiMAX may be a more suitable choice than 3G
  • CASE STUDY: A difficult case for WiBro in South Korea thus far
  • WiBro position and pricing
  • A competitive, multi-technology broadband market
  • WiBro shows signs of life

Section 2: Keys to profitability with WiMAX business models

• 2.1 Level of commitment will determine success
• 2.2 Parameters for different market environments
• 2.3 WiMAX pricing trends and differentiation
• 2.4 Broadband drives revenue; VoIP is needed for uptake
• 2.5 Is charging a premium for mobility a mistake?
• 2.6 The upside of the consumer electronics business
• 2.7 The wholesale proposition: shorter payback periods?
  • CASE STUDY: Wholesale business boosts market share, revenue and NPV for MNOs
• 2.8 Bottom line looks bad in medium term, but model can work

Section 3: Where WiMAX fits, and revenue forecasts

• Identifying the sweet spots for WiMAX deployments
• 3.2 Mobile WiMAX revenue forecasts
  • The US: Unforgiving environment requires hefty WiMAX investments
  • India: Initial focus on enterprise; opportunities abound in residential market
  • France: WiMAX as part of multi-play bundle
  • South Africa: WiMAX deployments in conjunction with fixed broadband network expansion
  • Mexico: Market leaders will set the tone
  • South Korea: WiMAX as part of a larger broadband play

Section 4: Breaking down the business case and profitability of WiMAX

• 4.1 Definitions and methodology for modeling WiMAX financials and profitability
• 4.2 Financial models built around real-world deployments
  • CASE STUDY: Sprint Nextel: WiMAX to find new sources of revenue
  • Xohm rollout strategy and the significance of Clearwire
  • Uptake will be a function of the installed base of WiMAX devices
  • Its core business bleeding, Sprint puts WiMAX network in doubt
  • Competitive market conditions make time to market crucial
  • Substantial Capex required to build the various revenue streams
  • Subscription models evolving to cater to a data-centric network
  • Monthly subscriptions help ARPU
  • Mobile broadband subscriptions lead in revenue generation
  • Aggressive wholesale channel strategy promises an upside
  • EBITDA in positive territory by year four
  • CASE STUDY: Max Telecom: WiMAX for broadband and - more importantly - voice
  • An aggressive wholesale strategy to expand distribution channels
  • WiMAX service differentiation around applications and pricing
  • WiMAX VoIP more promising than broadband
  • Market is ripe for broadband growth
  • A cautious approach for network investments
  • Adoption will be driven by VoIP and mobility
  • Mobility to bring ARPU up
  • Subscriptions drive revenue
  • EBITDA slightly positive in year five
  • CASE STUDY: Covad Wireless - fixed WiMAX for the SME market
  • Fierce competition for the enterprise customer
  • How Covad Wireless competes with the big guns
  • CASE STUDY: Enterprise WiMAX - fixed WiMAX for the SME market
  • Focused business model lowers Capex requirements
  • With enterprise customers, higher ARPU for better service
  • Revenue upside likely with an aggressive wholesale business
  • Cash-flow positive in year five
  • Appendix: Pyramid Research forecasts

• Exhibit 1: Operators deploying WiMAX for different purposes
• Exhibit 2: Basic voice telephony packages for TransTelecom and BTC
• Exhibit 3: US broadband prices per download speed (US$ per Mbps)
• Exhibit 4: Telmex Peru' s Explora pricing
• Exhibit 5: Broadband and PC penetration of households in Saudi Arabia
• Exhibit 6: Opportunities for WiMAX across Vodafone' s footprint in Europe
• Exhibit 7: Broadband pricing analysis: SK Telecom and KT vs. fixed broadband
• Exhibit 8: Mobile penetration of population and broadband penetration of households in South Korea
• Exhibit 9: South Korean net additions for HSPA, WiBro and fixed broadband
• Exhibit 10: WiMAX versus residential fixed-broadband pricing
• Exhibit 11: Estimated broadband subscription revenue as percentage of total revenue; Sprint Nextel and Max Telecom
• Exhibit 12: VoIP as percentage of total revenue for Sprint and Max Telecom
• Exhibit 13: WiMAX broadband ARPU analysis: Sprint Nextel and Max Telecom
• Exhibit 14: Projected WiMAX CPE evolution
• Exhibit 15: Wholesale revenue as percentage of total revenue, Sprint Nextel, Max Telecom
• Exhibit 16: Sprint Nextel: Wholesale subscribers and revenue
• Exhibit 17: Sprint Nextel wholesale net subscriber additions
• Exhibit 18: Telfort and market share evolution in the Netherlands
• Exhibit 19: Virgin Mobile' s contribution to T-Mobile UK' s subscriber growth
• Exhibit 20: TDC Mobil' s channel composition and profitability
• Exhibit 21: Capex, Opex and EBITDA margins - Clearwire
• Exhibit 22: WiMAX EBITDA margins - Sprint Nextel, Max Telecom, Enterprise WiMAX
• Exhibit 23: Identifying the WiMAX opportunity by country
• Exhibit 24: WiMAX percentage of total fixed and mobile broadband revenue in the US
• Exhibit 25: WiMAX percentage of fixed and mobile broadband revenue in India
• Exhibit 26: WiMAX percentage of total fixed and mobile broadband revenue in France
• Exhibit 27: WiMAX percentage of total fixed and mobile broadband revenue in South Africa
• Exhibit 28: WiMAX percentage of total fixed and mobile broadband revenue in Mexico
• Exhibit 29: WiMAX percentage of total fixed and mobile broadband revenue in South Korea
• Exhibit 30: Sample WiMAX applications
• Exhibit 31: Definitions of variables used in WiMAX financial models
• Exhibit 32: Methodology used in our WiMAX financial models
• Exhibit 33: Likely revenue streams for Xohm
• Exhibit 34: Sprint Nextel guidance on Xohm investments and performance
• Exhibit 35: Sprint' s WiMAX vendors
• Exhibit 36: Sprint quarterly revenue and OIBDA margin
• Exhibit 37: US mobile broadband subscribers and population penetration, 2006- 2012
• Exhibit 38: Broadband penetration of households in US, 2006- 2012
• Exhibit 39: Sprint: WiMAX Capex and Capex-to-revenue ratio, 2007-2012
• Exhibit 40: Breakdown of Xohm Capex ($2.5bn through 2008)
• Exhibit 41: T-Mobile HotSpot plans and pricing
• Exhibit 42: Xohm revenue projections and breakdown
• Exhibit 43: Pyramid Research' s projections of Xohm' s EBITDA margin
• Exhibit 44: Max Telecom' s WiMAX network deployment outlook
• Exhibit 45: Max Telecom guidance on WiMAX investments and performance
• Exhibit 46: Max Telecom data packages
• Exhibit 47: Adoption of mobile, narrowband and broadband services in Bulgaria
• Exhibit 48: Broadband subscriber base breakdown by technology in Bulgaria
• Exhibit 49: Max Telecom Capex tapers off after year two
• Exhibit 51: Comparative analysis of Max Telecom ARPU vs. market ARPU
• Exhibit 52: Max Telecom revenue breakdown
• Exhibit 53: Max Telecom' s EBITDA margin
• Exhibit 54: Efficiency of networks: WiMAX vs. pre-WiMAX standard
• Exhibit 55: Covad Wireless guidance for investments and performance
• Exhibit 56: Internet access penetration of businesses; mobile penetration of population, US
• Exhibit 57: Business broadband customers by technology in the US
• Exhibit 58: Spectral capabilities: Covad Wireless vs. Sprint
• Exhibit 59: Enterprise WiMAX Capex trends, 2007-2012
• Exhibit 60: Service adoption and penetration of covered businesses, Enterprise WiMAX
• Exhibit 61: Enterprise WiMAX ARPU vs. business ARPU in the US market
• Exhibit 62: Enterprise WiMAX' s revenue breakdown
• Exhibit 63: Enterprise WiMAX EBITDA margins

• Table 1: Financials of Sprint' s WiMAX venture (US$ thousands)
• Table 2: Key financial ratios of Sprint' s WiMAX venture.
• Table 3: Adoption and ARPU of Sprint' s WiMAX services
• Table 4: Financials of Max Telecom (US$ thousands)
• Table 5: Key financial ratios of Max Telecom.
• Table 6: Adoption and ARPU of Max Telecom.
• Table 7: Financials of Enterprise WiMAX (US$ thousands)
• Table 8: Key financial ratios of Enterprise WiMAX.
• Table 9: Adoption and ARPU of Enterprise WiMAX