X(ohm) marks the spot

It’s all well and good that some telecom analysts feel Sprint Nextel should reconsider its multibillion-dollar bet on WiMAX Nation in the wake of ex-company honcho Gary Forsee’s exit. The post-mortem musings of analysts are understandable, given that WiMAX represents a critical component of Sprint Nextel’s strategic plans and thus is fair game for second-guessing.
But slowing down or rethinking the highly anticipated rollout of WiMAX-set for launch in a handful of markets by year’s end-is hardly an option for Sprint Nextel. The No. 3 mobile-phone carrier doesn’t have the luxury of contemplating its navel on the great WiMAX experiment, even if analysts might think it’s a prudently nifty idea. Why? Because the Federal Communication Commission’s approval of the $35 billion Sprint-Nextel deal in 2005 was conditioned on an ambitiously specific buildout condition. Instead of forcing a divestiture of some or all of the considerable 2.5 GHz assets held by Sprint Nextel, the FCC required the merged entity to make good on its voluntary commitment to offer wireless broadband to at least 15 million people within four years and an additional 15 million Americans within six years. Moreover, Sprint Nextel agreed to be subject to FCC enforcement action if it fails to meet the milestones.
As such, Forsee’s replacement will have some explaining to do to Commissioner Jonathan Adelstein-the force behind Sprint Nextel’s 2.5 GHz merger condition-if the carrier decides to heed calls of telecom analysts and/or board members to put the brakes on Xohm. Any such move, besides inviting an FCC crackdown on Sprint Nextel, could also undercut Clearwire and have a chilling effect on the WiMAX sector.
True, it remains unclear whether Xohm can make a splash in the wireless market. One thing is for sure, though: the insatiable appetite for broadband connectivity and mobility will only increase in the future. So then, is Xohm the problem or the promise for better days at Sprint Nextel? Hard to say, but it would be nice to watch Sprint Nextel try to make a go of it. Mergers, particularly this one of equals, are inherently fraught with complications and challenges. A panicky rush to write off Xohm could prove unwise from a business standpoint. And it goes without saying that the FCC would be unhappy. As for Forsee, a golden parachute of potentially more than $54 million promises a soft landing.