LONDON (WiMAX Day). One of the key features of WiMAX that will give it a competitive advantage over 3G services will be pricing. This seems evident from recent news that Sprint Nextel will look at flat-rate pricing for its WiMAX services, rather than the expensive, multi-tiered fees associated with 3G services.

WiMAX services from Sprint Nextel will also be open. According to a report from IDG News Service, Atish Gude, senior vice president of mobile broadband operations at Sprint Nextel, noted at the WCA symposium in San Francisco this week that WiMAX was chosen partly because it has a different business model from cellular / 3G. WiMAX works on an open model, “in which subscribers can go anywhere on the Internet,” and 3G services work more like a “walled garden where users can only access certain services provided by the mobile operator.”

Sprint’s plan of open Internet access at a flat monthly rate is similar to other WiMAX services being planned in other countries. Companies such as Unwired in Australia, WiMAX-Telecom in Austria and Irish Broadband already offer fixed services at flat monthly rates of under $40.

More bits for the buck
WiMAX also will deliver significant price advantages on bandwidth. In comparison to 3G services, WiMAX delivers up to 4x more bandwidth, which is greater than new 3G technologies such as HSDPA, that crawl along under 700 Kbps.

According to Jan Richter, telecoms analyst at Dresdner Bank, 3G services and revenues are more geared to voice services, because the data service is minimal, and the pricing is more similar to mobile voice plans. Moreover, given the huge sums that mobile operators paid for licenses, some 3G services are priced high to try to recoup investments, although this is unlikely.

For example, a recent report in the Herald Tribune noted that Vodafone has spent nearly $33 billion on 3G licenses and network construction since 2000, however with its meagre profit margin from those services “Vodafone would need 107 years to recoup the total cost of its 3G investment,” the report noted.

The costs involved in launching and maintaining a WiMAX network are significantly less expensive than 3G. This means that network operators can be more flexible with pricing, and better manage competition. For an operator, mobile WiMAX also does not require significant investment in software and services, because it is inherently open.

With less pressure on operating margins, and greater incentive for customer uptake due to the bandwidth advantage, Richter believes that companies such as Sprint Nextel that have made big commitments to mobile launch WiMAX can easily recoup their investments within 3-5 years.