By Kelly Hill
Consider WiMAX a bit schizophrenic. The technology is taking two divergent paths as different countries and different companies explore how best to put it to use in their respective markets.
Dr. Mohammad Shakouri, board member and VP of marketing for the WiMAX Forum, has described the technology as serving “the richest of the rich and the poorest of the poor” as companies lay out strategies that include either a high-end focused, consumer electronics play or a wireless broadband provider for the masses and in rural areas.
Both strategies are playing out in the U.S. market, but the space is dominated by three major players with large spectrum holdings in the 2.3 GHz and 2.5 GHz bands: AT&T Inc., Clearwire Corp. and Sprint Nextel Corp.
Sprint Nextel and Clearwire have been overshadowing the conversation of late, first appearing to operate on separate tracks and then announcing a partnership that is supposed to speed the deployment of mobile WiMAX as well as ease the burden of network costs for each respective company. The corporations have outlined a plan in which Sprint Nextel will build out 70% of the initial 100 million potential customers to be covered, while Clearwire builds out 30%. Sprint Nextel has outlined plans for a wide variety of consumer electronic devices to make use of the new network and also hinted at allowing wholesale agreements that could boost WiMAX traffic.
Sprint Nextel’s bet
Sprint Nextel has been outpaced in the traditional wireless market by Verizon Wireless and AT&T Mobility in subscriber growth and customer metrics, and it is betting that changing the nature of the competition will give it an advantage.
“It’s very difficult to change the balance of the subscriber bases right now in the U.S.,” said Moe Tanabian, analyst with IBB. Given Sprint Nextel’s customer and financial issues, he said, “they have to do something drastic. … They’re relying on this assumption—it may turn out to be true—that we’re moving from voice-centric wireless consumption to a data-centric wireless consumption” during the next three to five years.
Tanabian noted that Sprint Nextel first began its WiMAX push by aggressively talking up the technology and laying out ambitious plans—and that it has since toned down its approach a bit.
“They started to see things are not as rosy as they thought,” Tanabian said—and that led to the choice of Clearwire as a partner for WiMAX. The two companies plan to cooperate on services and branding under the Xohm brand name.
Clearwire’s upward mobility
For Clearwire, meanwhile, the announcement of the Sprint Nextel deal has catapulted it from an untried, small competitor into one that can play in the ranks of the top four wireless operators. It opens up the ability for the company to reach a vast potential customer base of 100 million people and to augment its coverage initially through use of Sprint Nextel’s cellular network.
Tanabian also noted that the company recently announced distribution agreements with satellite television providers DirecTV Group Inc. and EchoStar Communications Corp. that would enable it to fashion a triple-play bundle of services.
“They’re trying to diversify their business model,” Tanabian said. “So if for whatever reason the device ecosystem doesn’t develop as fast as they think it will, they still have other means of forging a business.
“Clearly, Clearwire was the winner from this deal—although Sprint won as well, by turning a foe into a friend and just getting rid of that headache. But Clearwire, it was just pure, sweet sugar for them.”
AT&T in Alaska
AT&T declined to speak about its plans for its holdings in the 2.3 GHz bands. However, the company did issue a statement on its strategy related to WiMAX, noting its deployment this summer in Alaska and apparently taking the path of using WiMAX to extend broadband coverage rather than push new technology.
“AT&T has been heavily involved in the development of emerging technologies like WiMAX and Wi-Fi mesh networks, which bring strong potential for extending and expanding customers’ ability to access broadband connections. The company has played a leading role in development of emerging WiMAX standards, and has launched 22 limited deployments and trials of WiMAX and other fixed wireless technologies to date, eight of which remain in operation as commercial offerings today,” said AT&T spokeswoman Jenny Parker.
Parker added that AT&T Alascom had announced its latest deployment of WiMAX in Juneau, Ala., in July and that it “plans to deploy WiMAX-based broadband in additional Alaska markets in 2008.”
“Outside of Alaska, AT&T will evaluate further opportunities to deploy WiMAX and other fixed wireless technologies based on customer needs and the results of its existing technical and commercial deployments,” Parker said.
Those opportunities could also include the bucket of 700 MHz spectrum AT&T Mobility recently acquired from Aloha Partners L.P. for $2.5 billion. The spectrum, which is near the 700 MHz spectrum the government is scheduled to begin auctioning early next year, gives the industry’s No. 1 player a deeper spectrum portfolio covering nearly 200 million potential customers across the country.
The carrier said it has yet to decide how to use the spectrum, but with its enviable propagation characteristics, you can bet it will be for an important service.
“We’ll use the spectrum either for broadcast mobile or two-way voice and data services, but not both,” AT&T Mobility spokesman Michael Coe recently said. “We’ll make that determination based on what’s best for our customers.”
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