Devices may be dilemma for WiMAX operators

Editor’s Note: This article is an excerpt from RCR Wireless News’ May Special Edition, “Enabling the Mobile Revolution: Mobile Chips, Devices and Accessories.” The 80-page special edition is available here.
WiMAX operators around the world are facing a dilemma – do they consider themselves to be alternative broadband providers like Clearwire Corp., which touts itself as a DSL replacement that is cheaper and portable, or do they take a more traditional approach like Sprint Nextel Corp., which is selling a 3G/4G handset combination that runs at faster speeds where it has network coverage, and drops down to carrier’s CDMA system in places where WiMAX coverage is still being deployed. For Sprint Nextel and Clearwire, perhaps, the go-to market strategies are simple: Clearwire has been building its network without handsets (yet) because it doesn’t have a traditional wireless network to drop down to, and Sprint Nextel does. But the decisions aren’t so simple for other WiMAX providers around the world.
Vividwireless is an Australian-based WiMAX operator that just deployed service in Perth in March. The operator has only been commercial for a few weeks but already said it has been surprised by how many of its customers – half – are buying its services as for broadband replacement. It has also been surprised at how many of its customers are buying the home gateway product, geared to customers who plan to use the service primarily in the home. Further, 25% of its customers who buy the home gateway product are buying a VoIP plan offered by a sister company of vividwireless – even though the operator hasn’t spent a penny on advertising its VoIP service. Vividwireless CEO Martin Mercer said the operator is billing itself as a DSL replacement, touting the simplicity of its wireless offering. As such, vivid is debating whether to offer handset-like devices on its network once they become available. The operator doesn’t want to compete head on with cellular operators, pointing out that once you give someone a handset, the user expects coverage and abilities that work like they do on a handset.
For its part, Clearwire plans to introduce two 3G/4G handsets this year. How the carrier markets the devices will be interesting to watch. Sprint Nextel touts cost advantages, quality customer service with a no-questions-asked return policy and its Simply Everything plans for its cellular network. The carrier’s ad campaign for its 4G service centers around the experiences that can take place on a 4G network, whether it is connecting gaming systems in the woods or downloading a movie from the airport. Price isn’t mentioned. As Sprint Nextel introduces the HTC Evo 4G device, it will have to balance the cool things the device can do with more traditional handset advertising, like showing its sleek design and large-screen display.
In the LTE space, both Verizon Wireless and AT&T Mobility likely initially will sell data cards and dongles, and offer dual-mode handsets later. In such a competitive marketplace, Clearwire may find it’s easier to differentiate as an alternative broadband provider, and put less emphasis on its handset offerings.