WiMAX costs less to deploy than any other broadband technology. As the table below indicates many technologies such as fiber to the home (FTTH) are exponentially more expensive to deploy. The doomsday scenario for service providers using an expensive landline technology (and their investors) such as FTTH or cable is that after an invest-ment in the many billions of dollars to serve one small region, a WiMAX operator could enter their market and far less capital expenditure (CAPEX) and drive the incumbent, high CAPEX operator out of business.



Table 2: Comparisons of leading broadband technologies

The table above shows the strong economic advantage of WiMAX over other broadband technologies. With the exception 2.5 and 3 G wireless technologies, the other broadband technologies cannot offer mobile services and are not quadruple play capable. Disruptive technology is defined by Harvard Business School Professor Clayton Christensen as being "cheaper, simpler, smaller and more convenient to use" than legacy technologies. WiMAX is clearly a disruptive technology.



WiMAX: Low barrier to entry

As Table 4 would suggest, the barrier to entry for WiMAX service providers is very low relative to other broadband technologies. This has the potential to invite entrepreneurs into many markets to offer WiMAX-related services in direct competition with incumbent service providers who have invested millions if not billions of dollars in their respective network infrastructure. The best way to illustrate this is the notion that, for the price of a new pickup truck, an entrepreneur could be the ISP, the telephone company, the cable TV company and even the cell phone company for a small city. This puts at risk investment in incumbent service providers who do not upgrade their infrastructure to compete with WiMAX.



WiMAX Value Networks



Figure 43: WiMAX creates a new value network in telecommunications

A value network encompasses a series of industry participants into a vast series of symbiotic relationships. Telecommunications companies can be described as being "monolithic" in that they control every aspect of the service from the device in the customer's home or office, the means of access (copper, coaxial, or wireless) and all switching and application platforms. WiMAX is simply a means of access for customers. After access, the "internet model" kicks in where any variety of services (VoIP, IPTV, gaming, etc; remember, they are just applications) can be offered to the subscriber. In addition the WiMAX service requires access to IP backbones, which further expands the value network beyond a single monolithic service provider such as the traditional telephone company. The figure above illustrates the new telecommunications value network.



The Market Valuation of a WiMAX Provider

A January 2006 Wireless Communications Association presentation by Graham Barnes of NextWeb, (acquired by Covad for $24 million) provided an overview of the mergers and acquisitions potential for WiMAX-type players looking to cash out. As in the 1990's, the valuation process is key. Guidelines for valuations include:

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