Higher WiMAX Price Points in Emerging Markets

The PMP (price per MHz per population) for WiMAX spectrum has been highest in countries in the Middle East and Central and Eastern Europe (see Exhibit).

PMP equals the price paid for the license divided by the amount of spectrum in MHz in a given frequency band divided by the population covered by the license. PMP enables an apples-to-apples comparison of license costs. License fees are the result of an assessment of a number of factors, including the size of the spectrum allocated (often referred to as blocks, lots, or channel pairs) and the addressable market, which is restricted geographically. Without PMP, the information from two countries cannot be compared reliably.

Average PMP was next highest in Central and Eastern Europe (CEE): Approximately US$0.04. This is in contrast to average PMP in Western Europe: Close to US$0.01. We believe the higher relative price points are due to WiMAX’s stronger competitive position, thanks to limited 3G deployments, a lack of 3G licenses, and low broadband penetration. WiMAX as a low-cost solution for connecting rural areas is also increasing demand for its spectrum.

Exhibit: PMP (US$) by Region

Middle East estimates based on data from three markets in which WiMAX spectrum has been awarded; CEE based on three markets. Asia Pacific, 2; Western Europe, 5; North America, 2; and Latin America, 1.
Source: Pyramid Research.