Sprint's Difficulties Make Path to WiMax More Difficult

Carl Weinschenk

There is a lot for WiMax proponents to be pessimistic about in this Maravedis report on broadband wireless access technologies, especially when it is considered in the broader context of something that happened after it was written: the departure, announced this week, of three top Sprint executives.

 

The Maravedis report reinforces the notion, fair or not, that the fate of WiMax overall is tied to the success Sprint has in rolling out the technology. That's not a good thing for the other WiMax players. The report says Sprint will have to attract additional external funding to pull off the rollout. There appear to be three potential paths: It could spin off the unit while retaining ownership of the spectrum, slow the build out, and/or only use a portion of the spectrum for WiMax. The remainder could be occupied by Long Term Evolution (LTE) or another platform. While any or all of these may enable Sprint to limp forward, they hardly signify great success.

 

The report says there will be 10 million non-Sprint WiMax subscribers by 2013. The story contains no comment on the number, but it clearly is underwhelming.

 

Indeed, a big problem for WiMax is that the company it depends on for its future appears to be in turmoil. Recently, Sprint made announcements suggesting that the launch of its WiMax service, Xohm, was on track. Last week, however, the company announced that three top executives are leaving, though it's not clear whether they quit or are being forced out.

 

In any case, the departures certainly suggest a period of disruption and, undoubtedly, confusion. Furthermore, the commentary says the Sprint and Nextel factions are at odds and repeats reports from earlier this month that the company will close 125 of 1,400 retail stores. The carrier lost in excess of 100,000 subscribers during last year's fourth quarter. Many outlets -- including Xohm User, which appears to be a good source of news about the service -- report that the carrier will lay off 4,000 employees.


 

Whether the long-term prospects are good or bad, Xohm has one important thing going for it: It is here. The service is rolling out to "friendly users" -- employees -- in Washington, D.C.; Baltimore and Chicago. This RF Design story lists companies that are involved in the project. They include Amdocs (software and service support for the launch and ongoing operations); SwapDrive (customer data storage); eTelecareGlobal Solutions (voice and e-support); McAfee (security for PCs connected to Xohm); OQO and ASUSTek (embedding of capability into products); and Soho Square (advertising services).

 

Granted, this BetaNews commentary was posted during the second week of January and, thus, predates the news about Sprint's cutbacks and the exiting execs. It still seems that the reasons for optimism that are cited are relevant. The most important advantage is that it has a two-year head start on LTE, a major competitor for the 4G pot of gold. Thus, companies working with Xohm will be able to provide customers with external cards to existing mobile devices and embed functionality in new equipment. Another great advantage is that WiMax is based on IP from the ground up, unlike LTE and another competitor, High Speed Packet Access (HSPA).

 

Those truly are advantages. The bottom line, however, is that the stars appear to not be aligning properly for Sprint's Xohm initiative. If this is so, the effect on WiMax overall will be negative.



Add Comment      Leave a comment on this blog post
Jan 29, 2008 8:39 AM Mike Harlan Mike Harlan  says:
I think this writer (like the stock market) has overreacted to the latest news from Sprint. Consider:1. The Maravendis report indicates that there is strong and growing U.S. and global demand for WiMAX, and WiMAX networks are being deployed regardless of Sprint's issues. WiMAX is helped by Xohm/Sprint, but is NOT dependent on Xohm.2. Xohm/Sprint has already bought the equipment and done most of the installations for their Chicago and Washington/Baltimore WiMAX networks - those markets are going forward. 3. It's not at all unusual or unexpected for a new CEO, brought in becuase the Board's not happy with what's happening, to clean house - it would be surprising if he didn't.4. Sprint's longer term strategic options without WiMAX don't appear to be very good. Personally, I think they're losing cellular customers because other providers deliver more reliable service and are more customer-friendly (my family recently switched from Sprint to AT&T for these reasons.) Sprint's become the #3 or 4 horse in a 2 horse race. They badly need to give customers a reason to pick them instead of AT&T or Verizon - and the huge jump in bandwidth from WiMAX is their best shot, especially if they can do it while the others are still promising LTE but not yet delivering. By the time LTE is being deployed, Sprint will have established a strong nationwide WiMAX network (and fixed their customer service issues) with a stronger customer base - or they could be left without any good strategic options (and an even lower stock price.)So to say WiMAX's viability is in jeopardy because of one market research report plus Sprint's current internal issues seems to me to be a mischaraterization. Reply
Jan 30, 2008 1:04 AM wimaxed wimaxed  says:
I agree with Mike, I think by the time LTE becomes something tangible WiMAX it's going to be already a very well established technology.--- http://www.wimaxed.com Reply

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