WiMax: The Next Great Disappointment?

Carl Weinschenk

Gary Forsee's resignation as the chairman, president and CEO of Sprint Nextel could have ramifications on at least a couple of levels: It almost certainly signals a change in how aggressively the carrier executes its stated WiMax strategy. That, in turn, would have a major impact on the overall success of the next-generation platform.

 

Many of the issues are delineated in this insightful CNET piece by Marguerite Reardon. The main concern, and probably the top reason that Forsee was pressured to leave, is that Wall Street thought WiMax was too speculative to justify the money and attention being paid by Sprint, especially as efforts to fully integrate Nextel lagged. The plan -- as of right now -- is to budget $5 billion over the next three years to build a WiMax network. About $2 billion of that would be spent by the end of next year to offer the service to 100 million people. That's all up in the air right now, no pun intended.

 

The bulk of Reardon's analysis details the impact the change may have on Sprint. In the bigger picture, however, a move away from WiMax by Sprint could chill enthusiasm, at least to some degree, across the industry. Sprint and Intel clearly are the highest-profile WiMax champions.

 

WiMax won't fade away, of course. Intel, as Reardon points out, is planning to embed WiMax functionality in millions of devices, for instance. But a pullback by the carrier, even if it can be spun as being more about Sprint's internal machinations than the potential of the technology, is not good news for WiMax proponents.

 

The Clearwire/Sprint network deal also seems to be in trouble. This is spelled out starkly in this comment by Goldman Sachs analyst Jason Armstrong in a Financial Times piece. It is likely that similar messages are being sent directly to the company's caretaker leadership:

We would expect longer-term initiatives such as the Clearwire WiMax partnership to be [put] on hold and subject to review by a new leadership team.

The cracks in the Clearwire/Sprint relationship are further evident in this article in The Seattle Times. The piece says the actually signing of the agreement is taking longer than expected to come to pass, but it's still expected to be signed within a few weeks of the Oct. 6 publication of the piece. But, with Forsee gone and the WiMax skeptics ascendant, it is not outside the realm of possibility that the deal will be put on the back burner.http://www.itbusinessedge.com/item/?ci=34569

 

The picture was not without clouds for WiMax before Forsee's departure. This sobering look at WiMax at PC Magazine begins by suggesting that the Clearwire/Sprint deal may have been struck more out of weakness -- limited market opportunities -- than strength. That's speculation, of course. What isn't is the fact that Clearwire's positioning as a WiMax provider is a bit misleading. It certainly intends to use the technology, but currently serves its customers -- outside of a small pocket in a Hillsboro, Ore. beta test -- with other technologies. Perhaps the most disturbing aspect of the story, which was published last month, was the suggestion that Sprint "could be the technology's saving grace." If Reardon and others' speculation proves accurate, that potential saving grace is fading.

 

All is not lost for WiMax, however. It still has powerful proponents. First and foremost is Intel, whose proselytizing goes beyond its product road map. For instance, last month it joined Wireless Broadband Planning K.K., a joint venture that will seek a license from the Japanese government. Other members of the group are carrier KDDI, Kyocera, Daiwa Securities Group, the East Japan Railway and the Bank of Tokyo-Mitsubishi. Intel also signed an agreement with Nokia and Nokia Siemens Networks to test for interoperability across its silicon. Nokia said it will use Intel's "Baxter Peak" WiMax silicon in its coming Nseries tablet PCs.

 

WiMax remains a technology with tremendous potential. What remains to be seen is whether those who back it are savvy enough to work through the tricky competitive landscape and enable it to realize the bright future that has long been predicted.



Add Comment      Leave a comment on this blog post
Oct 12, 2007 9:46 AM MrMagnus MrMagnus  says:
As the largest mobile company in the Caribbean we have launched successfully both 802.16d and as of September 28th our first commercial 802.16e network in the Cayman Islands. We have tested the WiMAX gear for over a year and the tremendous strides it has done in just 12 months has been amazing. The performance we see out of our RevE system far exceeds what we could expect from a 3G platform. We offer QOS and COS with speeds from 512Kbps-4Mbps. As for Sprint they have no other choice than to stay the course on WiMAX if they want to get to the "fixed line" broadband user, 3G cannot compete against them. Although WiMAX cannot give the end user the 10+Mbps you now receive from cable co the benefit of a "personal" 2-3Mbps connection which has the characteristics of a fixed line while being mobile/portable is what users will levitate towards similarly as they have done for mobile phones and iPods. Today a service like Rhapsody is not popular since it is contained to the home and your PC, when a player with Mobile WiMAX embedded emerges in the market and you have access to 2+M songs in your pocket, the iPOD classic will look very outdated and "old" school. Personalized service and moving the power from the service provider to the end user will prove to be the secret sauce for mass market adoption. Reply
Oct 12, 2007 12:35 PM jonathan jonathan  says:
I like your title: Absolutely true!!!This is possible to be a Total disappointment for Telco. So far any Telco make money with WiMax? Reply
Oct 18, 2007 5:26 AM gaoyhhot gaoyhhot  says:
Mr. Magnus,1. How many subscribers you have and how many years you could get your investment back?2. If there's any risk that other ways of broadband connections will be available in the island after a few years? A Swedish Wimax operator went to bankrupt recently due to this reason. Reply
Oct 21, 2007 2:31 AM eric eric  says:
I do not see any problems deliver same data rates in a 3G network using WCDMA HSPA and over significant larger areas. Sprint has many choices e.g. go with UMTS-TDD and migrate to WCDMA LTE (or HSPA+), and to be honest the only logical path forward is to roll out a WCDMA HSPA network now and upgrade it with HSPA/HSPA+ and LTE within 5 years (other paths are certain death or become a marginal player). For gaoyhhot the WiMAX business case in Sweden always been zero only by money from rural funds it can survive or in very small local operation, basically all have been paid by Intel or WiMAX vendors (or regional/state/EU/ broadband funds and all have failed due to costs of deployment). Reply

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