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.

Amazon launches info sharing Web site Askville.com

NEW YORK, Nov 29 (Reuters) - Amazon.com Inc (AMZN.O: Quote, Profile, Research), the world's largest Web retailer, launched Askville.com, an information-sharing Web site where users can ask questions and answer queries from others, on Thursday.

The site, open to all of its customers, has been in beta testing since December 2006 and has already been open to a few users, Amazon said.

Similar services are offered by Yahoo Inc's (YHOO.O: Quote, Profile, Research) Answers and other Web sites such as AnswerBank. Google Inc (GOOG.O: Quote, Profile, Research) also had an "Answers" section, which has been discontinued.

USB Wine

USBWine

New handheld set to exploit WiMax

A Taiwanese government-backed consortium has developed a powerful handheld PC that uses a WiMax wireless broadband connection to access the web.

The MTube, as the device is called, carries a 1GHz microprocessor made by Via Technologies, an x86-based processor able to use software meant for PCs. But the MTube weighs only 150 grams and has a 2.8-inch screen, so it's small enough to fit in person's pocket. It can store 8GB of songs, photos and other data and runs on a Linux OS.

MTube also works with Wi-Fi connections, but does not work on 3G mobile telecommunications networks, according to Shen Shu-heng, an official at Taiwan's Institute for Information Industry (III), one of the groups responsible for the device.

Development of the MTube, which is made solely from parts manufactured in Taiwan, is aimed at promoting Taiwanese made goods, as well as developing more devices and applications for WiMax wireless Internet broadband services, Shen said.

Taiwan is positioning itself to be one of the fastest adopters of WiMax connectivity outside of North America through its MTube initiative. Officials see the technology as a good way to spread broadband Internet access throughout the island, which includes remote mountain villages and sparsely populated outlying islands.

Last month, the Taiwan government added several multinationals to a growing list of WiMax wireless broadband technology partners, including Alcatel-Lucent, Motorola, Nokia Siemens Networks and Sprint Nextel. The partnerships are intended to encourage foreign companies to build WiMax research and development centers in Taiwan and look to Taiwanese companies for parts and contract manufacturing work.

Intel was an early champion of WiMax as a replacement for the Wi-Fi wireless networking standard, used for Internet access in coffee shops, airports and other places in much of the developed world. The chip giant has already signed a similar agreement with Taiwan and is working with Taiwanese computer parts makers to ready the technology for inclusion in laptop PCs next year.

Taiwan's III worked with the Science and Technology Advisory Group, the Industrial Technology Research Institute (ITRI) and other government agencies to develop the MTube.

By Dan Nystedt, IDG news service

McCaw Bets Again on Wireless Frontier

An article in the Wall Street Journal sheds a bit more light some of the plans Sprint and Clearwire have been considering for their WiMAX businesses after ending their plans to build out a nationwide network together. The article, which features a rare interview with Clearwire's Craig McCaw (although very light on the quotes and attributions), says Sprint's board last week rejected a plan to spin off the WiMAX unit and merge it with Clearwire. Meanwhile, it says Clearwire is holding discussions with parties that might include Intel, Comcast and Google about a direct partnership.

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New WiMax Players Could Emerge As Sprint, Clearwire Split

NEW YORK -(Dow Jones)- The early end to the partnership between Sprint Nextel Corp. (S) and Clearwire Corp. (CLWR) opens the possibility of others getting involved with WiMax, a longer range version of WiFi seen as an attractive way of connecting consumers online.

Those who might pursue a WiMax partnership include Google Inc. (GOOG), cable companies or satellite TV providers. Clearwire - which builds and operates the WiMax network and service - also could try to expand the business itself, and then there's the possibility that Sprint, after it finds a new chief executive, could seek a reconciliation.

"It's fair to say we are looking and exploring all of our potential strategic options," Clearwire Chief Executive Ben Wolff told analysts on a Friday conference call. "There's quite a lot of focus on this space now."

The attraction of WiMax isthe ability to provide an alternative road to the Internet, freeing a number of industries from the stranglehold placed on them by the telecommunications and cable companies. The potential to offer mobile phone service over WiMax is attractive to cable. For Clearwire, Kirkland, Wash., partnering with a household name gives it instant credibility and the means to acquire additional wireless spectrum.

But the cost of building out the network may serve as a detriment to some, and was likely a concern that Sprint, Reston, Va., factored in when ending its partnership.

Sprint's departure is a huge blow to Clearwire. Shares are down 25% to $13.46.

Google In Play?

Of all the possible alliances, the most intriguing is a potential deal with Google. The Internet giant recently unveiled its Android mobile phone operating system and the Open Handset Alliance in an effort to push its philosophy of an open network, which would fit well with WiMax wireless technology.

Google also plans to participate in the upcoming Federal Communications Commission auction for wireless spectrum, which could give it the necessary spectrum to build a national network, although it has little interest in building one.

Enter Clearwire, which could handle the deployment and run the service for Google. In return, it would get the backing of a high-profile company and nationwide reach. Industry observers say that the expanded reach is critical when launching a new service, and that a local market approach won't cut it.

"If you build a national product, you need a powerful brand, or be willing to work with multiple partners with powerful brands who can attract a large customer base," said Rory Altman, a partner at consulting firm Altman Vilandrie & Co.

Google couldn't immediately be reached for comment. Wolff, on the call, said the company doesn't comment on any potential partnerships.

Cable, Satellite In The Mix

Clearwire also has a partnership with DirecTV Group Inc. (DTV) and EchoStar Communications Corp. (DISH) in which the satellite companies will bundle its television service with Clearwire's WiMax connection, giving it a pipe into the home.

An independent Internet pipe into the home is critical for the satellite companies because their major bundling partner, the telecommunications companies, are building their own TV service.

"Without (another Internet connection), they risk economic foreclosure in the 40% of the country where the telcos build fiber, as the only two broadband pipes available in that portion of the country will be tied - potentially inextricably - to competing video offerings," Craig Moffett, an analyst at Sanford C. Bernstein & Co. LLC, said in a note.

The satellite companies could strengthen its relationship with Clearwire and help it acquire more spectrum in the FCC auction. It attempted to buy spectrum in the last major auction a year ago, but was quickly outbid.

Both EchoStar and DirecTV say that they haven't changed their partnership with Clearwire, and declined to comment beyond that.

Sprint backing away from Clearwire opens up the possibility that the cable companies could get involved. The cable companies could work with Clearwire, but the more likely path is hooking up with Sprint. Moffett, while acknowledging it's quite speculative, said the cable companies could use WiMax to as the " answer to the wireless question."

A deal isn't without complications. The existing relationship - a cellular joint venture called Pivot - has been a disappointment, and Sprint recently stopped the expansion of its service. But the two parties remain close.

"Cable, despite the evident difficulties in getting their voice-based venture with Sprint off the ground, remains allied with Sprint," Moffett said.

Time Warner Cable Inc. (TWC) declined to comment. But on Wednesday, Chief Executive Glenn Britt told analysts the company was exploring different wireless technologies.

"There's an alphabet soup of this, but it's WiMax, 4G, et cetera, et cetera, and it's different flavors I don't think anybody in the whole world really understands exactly where the technology is going."

Comcast Corp. (CMCSK, CMCSA) also declined to comment.

Clearwire On Its Own

Clearwire could attempt to expand alone but would be relegated to a local player.

"Clearwire returns to more of a local market model," said Jonathan Schildkraut, an analyst at Jefferies & Co. "We're still seeing the early stages of that model coming together."

The company is deploying in smaller markets but still has few customers. In the third quarter, it added 49,000 subscribers to bring its base to 348,000. Because of the wireless spectrum it owns, it can only serve smaller markets.

Clearwire operates like a local wireless provider such as Leap Wireless International Inc. (LEAP), building from market to market in a slow expansion.

Sprint, meanwhile, said it is on track for a soft launch of its Xohm WiMax service, considered a longer range version of WiFi, by the end of the year, with a commercial launch expected next year. Spokeswoman Leigh Horner declined to comment beyond those plans, only saying that the company would further review its deployment next year.

The best move may be a reconciliation. Sprint and Clearwire fit together well both in terms of their complementary wireless spectrum and their experience with the technology, and they will likely still work together down the line. Sprint would have given Clearwire a national presence and depth in spectrum, as well as access to Sprint's backhaul network infrastructure.

"We are continuing to discuss with Sprint on how to best collaborate on building a WiMax network," Clearwire's Wolff said. "I can't say if a deal will be reached."

He noted that all of the reasons that brought the two parties together still remain, but that the company has to move forward.

"At the end of the day, Sprint and Clearwire will figure out ways to work it out," Schildkraut said. "I do not think that Sprint is going away in the WiMax world."

-By Roger Cheng, Dow Jones Newswires

One Companies Loss (Sprint) is another Companies Gain (Google)

Will the split between Clearwire & Sprint be to the advantage of Clearwire...Will Google buy Clearwire or Partner with them...

Sprint and Clearwire have big holdings in 2.5 GHz , other countries outside of the USA are also looking at 2.5 GHz as the place for WiMAX deployment. So that means that equipment etc. could work (potentially) worldwide. That isn't the case with 700 MHz, where only the U.S. is deploying it (so far) for wireless services. Everyone else is still using 700 MHz for television.

Now Sprint and Google have announced they're NOT working together. This is where it was going:

Sprint network bandwidth, location detection and presence capabilities will be matched with Google’s popular communications suite – Google AppsTM – that combines the GmailTM, Google CalendarTM and Google TalkTM services. Customers will be able to experience a new form of interactive communications, high speed Internet browsing, local and location-centric services, and multimedia services including music, video, TV and on-demand products.

Google is spreading its bets, and sees global potential in WiMAX.

Here is the thinking driving this latest Google rumor across the blogosphere. Google is interested in the 700 MHz spectrum auction. Google is also interested in WiMax. Since Google was a part of the Sprint, Clearwire WiMax partnership, the apparent end of that relationship would indicate that Google is out in the cold when it comes to a WiMax partner.

WiMax Massacre: Sprint (S) And Clearwire (CLWR) Split-Up

WiMax appears to be such a promising technology, at least on paper. It can send wireless broadband signals for miles from one base-station. If is faster than 3G, the core technology used for cellphone signals by AT&T (T) Wireless and Verizon Wireless.

WiMax can also send signals to PCs and hand-held devices. It is a broadband dream come true. It has the backing of tech giants including Samsung, Intel (INTC), and Motorola (MOT)

The only problem with WiMax is that it is not getting deployed around the US, at least not with any haste.

Sprint was to spend $5 billion to create a WiMax network that would reach 100 million people two years from now. WiMax start-up and recent IPO Clearwire (CLWR) was also building a network. It was probably going to need to spend as much as Sprint planned to. Both companies decided to link up and cooperate on the build-out and allow one another's customers to have free roaming privileges around the US.

But, Sprint and Clearwire broke off their agreement today. There has been pressure on Sprint to cut back capital spending as its core subscriber base has begun to drop. Sprint's recently departed CEO was a big WiMax champion.

Whither WiMax now?

For one, the Sprint plans are not dead. What becomes of them may depend on the thoughts of the company's yet-to-be-located new CEO.

Clearwire's stock is likely to take an awful beating on the news. But, Intel and others have a tremendous stake in the technology. The chip company is making products that could work in hundreds of millions of devices that would connect to a national WiMax network. Nokia (NOK), Samsung, and Mototola could bring in very large sums building the WiMax infrastructure and providing devices which will operate on it.

Look for a group of companies, perhaps lead by Intel, to put $2 billion or $3 billion into Clearwire. The company's market cap is only $3 billion, so the money might have to go in as a convertible preferred. That would probably give Intel and its partners de facto control of Clearwire.

But, it will take something at least a bit extreme to keep WiMax in the US on track.

Douglas A. McIntyre

Google G-Phone

New G-Phone developed on Android open platform for mobile phones and the Open Handset Alliance.