Thursday, November 29, 2007

Can Sprint Hang On to WiMAX in the Face of a Financial Struggle?

Sprint is under increasing financial pressure as it loses subscribers to competitors such as Verizon, T-Mobile, and AT&T,” says Phil Solis, principal mobile broadband analyst at ABI Research. “Many say Sprint should focus on its core business rather than push forward with WiMAX, but this idea is nonsensical.”

ABI Research believes that within the general context of competitive prices, extensive marketing campaigns, and the continual release of new devices, Sprint would be foolish to abandon a differentiator such as WiMAX.

“It’s ironic,” continues Solis, “because Sprint’s investors seem to be pressuring the company to slow down if not halt completely its WiMAX deployments; meanwhile this could be the best avenue to turn the company around.”

In July 2007, Sprint announced a partnership with Clearwire, splitting build-out costs 63%:37%, respectively. But rumors suggested a breakdown, causing Sprint to bear the full financial weight with respect to WiMAX development, thereby adding to its monetary burdens. Many believed the contract was severed, but in fact, the two companies never formed an official contract; only a letter of intent was signed.

“So in reality, a ‘breakup’ never occurred,” explains Solis. “And at present, both companies are continuing with their own mobile WiMAX networks, with various options still open – a partnership remains viable. This may take a form roughly similar to what was originally conceived, or it may be a roaming arrangement.”

WiMAX network deployments hold great potential to re-shape the global telecommunications industry due to WiMAX’s expanded device array in which handsets play just a small part. Other 3G and 4G air interfaces will do this as well, as noted by Samsung’s HSPA-enabled camera, Amazon’s Kindle e-book reader with EV-DO, and Verizon Wireless’ announcement that it will open its network to any device supporting its air interfaces and spectrum; but there is a bigger push to do this with WiMAX, and it is expected that WiMAX chipset prices will be more competitive than 3G chipsets.

The recent ABI Research report WiMAX Market Analysis and Forecasts examines major drivers and barriers for WiMAX and compares it with 3G and other 4G technologies, and contains forecasts for 802.16-2004 and 802.16e-2005. It forms part of two ABI Research Services: Mobile Broadband, and Wireless Infrastructure.


ABI Research is a leading market research firm focused on the impact of emerging technologies on global consumer and business markets. Utilizing a unique blend of market intelligence, primary research, and expert assessment from its worldwide team of industry analysts, ABI Research assists hundreds of clients each year with their strategic growth initiatives. For information, visit www.abiresearch.com, or call +1.516.624.2500.

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