Wherefore Woosh as WiMax wobbles?

Woosh caught between a rock and a hard place, says analyst

After another poor result, analysts are seriously questioning the future of New Zealand wireless pioneer Woosh Wireless.

“It is hard to see any future for Woosh as a standalone company without an emergency cash injection — that’s the sad truth,” says IDC telecommunications research manager Rosalie Nelson.

“It is caught between a rock and a hard place: it has a network technology that is being totally marginalised by rapid advances in both fixed and mobile broadband. And the window of opportunity it had for a WiMax network build is closing rapidly as both Telecom and Vodafone launch a mobile broadband battle.”

Woosh this month reported a further loss of $21.2 million for the year ended 30 June 2008, but perhaps more serious was a significant decline in the start-up’s rate of growth.

Woosh’s revenue grew from $16.4 million in 2007 to $17.2 million in 2008, an increase of 5%. At the end of the 2007 financial year the comparable growth rate was more than 50%, off revenue of $10.4 million in 2006.

Nelson says in the current climate, Woosh’s chances of finding a white knight willing to fund a whole new WiMax network build whilst keeping the business afloat is “next to nil”.

“Without this, Woosh is likely to be one of the first to face the tough choices of forced consolidation or shutting up shop in the current environment,” she says.

Nelson’s views were echoed by Australia-based analyst Paul Budde, of BuddeComm.

Budde says Woosh is not alone. WiMax has had an uphill battle around the world. He says WiMax delivered “too little, too late” and has been overtaken by other technologies in both fixed and mobile.

“It’s a sad story, but that’s the case,” he says. The only option for WiMax is to find niches in fixed wireless, he says.

“It was all nice in theory six or seven years ago, but fixed technology has progressed enormously over the same time,” he says.

Budde adds that this generally cannot be done in a commercial way and requires subsidies as a community service.

“Niche markets are all highly subsidised,” he says.

Nelson says Woosh highlights the challenges that face any start up — including NZ Communications.

“Network operation is increasingly a game of scale: in a developed market you need economies of scale in equipment and device purchasing to manage costs competitively, and the wherewithal to differentiate through channels, pricing and marketing. You need to rapidly acquire your customer base in order to justify the cost of expanding coverage. In a saturated market that requires the deep pockets to buy market share.”

Nelson also mirrors Budde in describing the Woosh case as “sad”.

“Woosh was one of the few competitors willing to challenge the status quo, invest in a new network build and seek to disrupt what was a cosy and complacent market. But it was at the bleeding edge of a new technology and simply couldn’t keep pace with market changes,” she says.

Woosh did not respond to calls or emails for comment on its results or future. The company reported net assets of $25.9 million, down from $47 million, with accumulated losses now totalling $142.2 million. Cash on hand has fallen from $6.4 million to just $1.5 million.

Up until 2003, Woosh was known as Walker Wireless. Renamed, it originally announced plans to roll out a wideband CDMA network to cover 70% of Auckland as well as the central business districts of Wellington and Christchurch. Woosh also intended to roll out networks in several of the Labour government’s Project Probe regions, but withdrew from several as Telecom turned up the competitive heat.

In 2006 Woosh bought wired ISP Quickksilver.

Later that year it announced plans to build a mobile WiMax network in Hamilton. If the Hamilton deployment was succesful, Woosh said WiMax would be rolled out nationwide over the next few years.

Join the newsletter!

Error: Please check your email address.

Tags Networking & Telecomms ID

Show Comments

Market Place

[]