Business Development Strategies for Wireless Broadband Operators: the Need for Mobility Integration towards Profit Returns

The fixed broadband market is converging with the world of fixed wireless solutions under the umbrella of broadband wireless. Companies are offering a variety of different service technology options to the market that may compete or work in conjunction with each other to meet user requirements for higher bandwidth lower latency solutions, differing in terms of their degree of mobility, level of performance and their market penetration. In this context, broadband wireless is currently considered as a part of alternative access technologies with DSL, cable and mobile. However, true mobility integration in order to offer competitive bundled services as fixed DSL or cable operators, the so called “triple play”, “multiple play” and the like are far for being real. From the existing wireless technologies WiMAX appears as the one that will help make broadband wireless the third access technology (the other two being fixed and mobile). Optimistic new entrant operators believe WiMAX has a high potential for success as in emerging markets operators are interested in using WiMAX for low-cost voice transport and delivery, while in developed markets WiMAX is shown as a broadband Internet access solution. In a competitive landscape of triple play from fixed, and mobile 3G services from mobile, broadband wireless operators have different strategic options to compete in broadband, mobility and ideally in both arenas. In this document we present a practical case of a potential wireless broadband operator based on WiMAX. In order to particularize the business model presented we have considered Spain, as current situation of Spanish markets in fixed and mobile is very fast moving (three worldwide mobile leaders competing -Telefonica Móviles, Vodafone and Orangeplus a fourth 3G license holder without operation; cable operator consolidation; Telefonica merging with Telefonica Moviles towards business reintegration), the regulatory environment is changing dramatically for existing operators (as an example, last January the European Commission allowed Spanish regulator to introduce MVNO to foster competition) and wireless broadband technology is continuously evolving (first commercial pilots based on WiMAX have been recently launched). The business case presented describes and characterizes market size, target segments and market shares, expected sales and prices, network design, investments and expenses needs, and finally presents a financial analysis to evaluate its viability. From our results we conclude that a broadband wireless access operator deploying its own network with the objective of competing in the broadband needs for mobility integration into its business to guarantee profits. Even more, sensitivity analysis shows that profitability is highly dependant on the number of potential mobile users the wireless broadband operator can attract.