Requirements for free over-the-air Internet using WIMAX

What kind of businesses can potentially sustain free over-the-air, country-wide, Internet access over WIMAX enabled devices? I have been doing some math here. But let me touch upon the last part of the previous sentence. WIMAX enabled and WIMAX integrated devices are expected to become common by 2010. You would require WIMAX integrated phones/devices if you want to push ads down those devices. And you would have to wait till around 2010.

A country wide WIMAX network: Let us consider the United States. The operator would need around 40,000 base stations and it would cost around $300-400 dollars per site including installation. So the cost of laying down the network would be around $5 billion. Let us leave aside the OPEX for a while (likely to be slightly under a billion dollars per year, by the way). For such a network, one would need spectrum of around 50 – 70 MHz and getting that would cost anything in the range of $7-10 billion.

So the initial set up cost of such a network would be in the range of $12 – 15 billion. If we assume a realistic RoI of 10-20%, we are talking about revenue targets of $1.2 - $ 1.5 billion a year on the lower side and between $2.5 billion to $3 billion on the higher side.

And finally, how to generate that sort of revenue through advertising if you want to offer the service for free? This is why the types of Google are the ones that can handle this kind of business model. You would require the kind of advertising clout that companies like Google possess. Others will struggle. Others will have to find alternate sources of revenue such as VoIP and IPTV over WiMAX. Those would be the likes of telcos, I think.