Whither WiMAX?

Posted by: Cliff Edwards on May 1, 2008

The wait for a U.S. commercial launch of the new WiMAX mobile broadband technology may finally be coming to an end.

Struggling Sprint Nextel has repeatedly pushed back its planned launch of the Xohm WiMAX service, as it tries to line up funding for the venture. The company, after months of wrangling, is closing in on an agreement that would spin out the business and merge it with a similar service being offered by Clearwire. An announcement could come as early as next week, according to people familiar with the negotiations.

The combined venture would receive at least $2.5 billion in additional funding from cable outfits led by Comcast, Internet search company Google and chipmaker Intel.

The companies are racing to deliver on the promise of offering blazing-fast Web connections to all types of mobile devices and consumer electronics. They’re also hoping to get a jump on AT&T and Verizon, who are promoting a rival but similar so-called fourth-generation wireless technology called Long Term Evolution, or LTE. That technology is said to be about two years behind WiMAX in development—and it has not yet gotten the broad device support pledges like those from Samsung, Motorola, Nokia and others in the WiMAX camp.

The first WiMAX devices will likely be USB dongles, PC Cards, and home modems, followed by ultramobile PCs (UMPCs) and portable media players such as Nokia’s N810 tablet.

Even so, WiMAX faces many hurdles. The technology has been operating on a soft launch basis in Baltimore, Chicago and Washington, D.C., but has yet to be proven capable of handling heavy network loads. Sales and marketing will be just as important to educate consumers about the largely unknown technology. It’s also still not clear what the executive structure of the new Xohm will look like, nor just how much influence Google and the cable outfits will have over strategic direction.

Sprint also has its own troubles that could derail WiMAX if the deal does not conclude as soon as expected. Sprint has struggled with massive subscriber losses and weak financial performance since it bought Nextel in 2005. It expects to lose millions of subscribers this year. Rating agency Standard & Poor’s, a McGraw-Hill sister company to BusinessWeek, today cut Sprint’s $22 billion in senior unsecured ratings and corporate debt to junk bond status.

Reader Comments

Conrad

May 2, 2008 8:18 AM


The Simply Everyting unlimited calling and data plan from Sprint is doing much better than expected, according to Sprint execs. It is offering value to heavy wireless users that competitors have yet to step forward and match. Analysts are not expecting a good first quarter, but the success of this plan and other good strategic moves under new CEO Dan Hesse will be what analysts are most interested in seeing.

Alan Beattie

May 3, 2008 12:46 AM

I have been tracking WiMAX for several years, and it's incomprehensible to me that it has taken this long for it to be unleashed here in the US. It's been thoroughly vetted in countless international markets, and it will rewrite the balance sheet of every company that becomes involved. It's a game changer.

What I don't understand is why Apple never pursued a deal with Sprint & Clearwire for their spectrum -- it's a no-brainer, especially now that Apple is going to try to invent the movie download marketplace where speed is crucial.

Obviously, morons like Ralph Whitworth have "buzzed at the screen" over at Sprint and tried their best to look backward instead of ahead. Hopefully the deadwood has been cleared and a new market finally born.

Ashok Agrawala

May 4, 2008 7:33 AM

As the WiMAX technology gets deployed in the US a number of operational and performance questions have to be addressed. Equally important is the kinds and variety of applications that are available and suited to the US and world markets. By establishing the first WiMAX Forum Applications Lab (WFAL) in the US at the University of Maryland the WiMAX Forum is moving in the direction of not only addressing the technological questions but also supporting the development and testing of new, innovative applications. The MAXWell Lab (the WFAL) at Maryland is going to focus on developing location-aware applications which is the next major challenge for applications.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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