Analyst Angle Special Edition: Why Sprint Nextel is Bad For WiMAX

Editor’s Note: Welcome to a special edition of our Monday feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry. In the coming weeks look for columns from Jupiter Research’s Julie Ask, Current Analysis’ Avi Greengart and iGR’s Iain Gillott.
If you’re still waiting to pick up your iPhone, hold tight-I have the inside scoop on an upcoming model.
Identical in form to the current 8 GB device, the new wiPhone will support WiMAX instead of EDGE. Yep, no more molasses-like downloads. The promise of full, open Internet access on the go will be fully realized. It won’t be subsidized, but it won’t be connected to any specific operator either. Sure, it will cost you a pretty penny, but it will be worth it.
OK, you know I’m joking. still, there is a point.
Nobody will deny that Sprint Nextel has done more for WiMAX than almost any entity on the planet. Sprint Nextel’s early commitment to mobile WiMAX boosted the technology’s profile. Its decision to deploy a national network drove new vendors into the space. By engaging three different networks vendors (Motorola, Nokia Siemens and Samsung) and additional device makers (ZyXEL, ZTE)-and making them all play nicely together-the company is actually building a WiMAX ecosystem from the ground up. Against this backdrop, constant messaging of Sprint Nextel’s WiMAX vision-delivered by charismatic execs like Barry West-helps would-be WiMAX players understand the potential of the technology and, frankly, drives further excitement and interest behind 802.16e-2005. It is completely fair to say that without Sprint Nextel, interest in WiMAX as a mobile broadband technology would be a fraction of where it stands today.
Of course, as much as it’s true that Sprint Nextel has driven the market’s perception of WiMAX, it’s also true that Sprint Nextel has a relatively unique view of WiMAX through the near and medium-term. Consider the highlights of its plan and assets: a tight focus on broadband mobility; unsubsidized dual-mode devices; WiMAX-powered consumer electronics; IMS-powered handoff with 3G services; femtocells; spectrum enough to shoot for 20 MHz channels and WiMAX backhaul. Now, consider the highlights of the mobile WiMAX deployments that have taken place to date and the deployments expected to power the early days of the market: emerging-market focused; fixed and portable applications; PC cards and desktop modems; single-mode devices; IMS for basic applications such as VoIP; relatively constrained spectrum assets.
It’s no wonder that Sprint Nextel’s plans have taken center stage. They’re sexy. Combined with successful marketing, Sprint Nextel has become the embodiment of WiMAX for many in industry, especially for casual observers such as would-be users and the analysts up on Wall Street. In reality, however, Sprint Nextel is not representative of your average mobile WiMAX operator. For much of the market, the interest in WiMAX is very different from what Sprint Nextel has planned. and will be for some time.
So, let’s say we can agree that there are two different WiMAX markets in the near term: Sprint Nextel’s mobile broadband vs. fixed and portable access in emerging markets. Why, then, is it a problem that Sprint Nextel’s “vision” gets all the attention? It’s the exciting one. It deserves the attention, right?
Yes, it does deserve attention. The problem is one of timing and expectations. Sprint Nextel has done a superb job of painting a future where all our consumer electronics products can access the Internet at multi-megabit speeds, where multi-mode devices deliver seamless access even where WIMAX coverage isn’t yet solid, where femtocells ensure good coverage in the home. and, where none of this will cost much. What it has done less well is telegraph the timeline for making this a reality. Yes, its first networks will be up and running by the end of the year. Yes, commercial services are expected in the first half of next year, with 100 million POPs covered by the end of 2008 (thanks, in part, to Clearwire). But, when will WiMAX/EV-DO handsets be around? How about those laptops with embedded WiMAX? Will I have my WiMAX-enabled Gameboy for Christmas?
Which brings us back to the wiPhone. The concept is in line with Sprint Nextel’s WiMAX strategy and, to be fair, the direction some device manufacturers would like to move to (unsubsidized and open). Yet, other than Samsung, few vendors have been talking up WiMAX phones or consumer electronics. You can’t blame them. It’s a classic chicken vs. egg scenario. The networks don’t exist yet and neither does the scale necessary to deliver reasonably priced products. You can argue the rationale, but, for some reason, Steve Jobs and company decided to make the iPhone an EDGE device. HSDPA was simply (pick one): too tough on battery life, too costly, limited in coverage, unproven. At last count, however, the GSA found 117 commercial HSDPA networks with 291 announced HSDPA-capable devices. If HSDPA is not advanced enough to warrant an iPhone, what does this say for WiMAX circa 2008?
The simple point? In describing its long-term plans for WiMAX, Sprint Nextel has set some lofty expectations that won’t be realizable in the near-term. We won’t be seeing WiMAX-enabled toilets or refrigerators or robot dogs in the near-term. Sprint Nextel’s first WiMAX devices will be laptop-focused (modems and PC cards) and mobility is unlikely to be on par with 3G when the networks launch. Yet, after years of hype, people are bound to judge the technology on Sprint Nextel’s near-term results. and be disappointed. Unfortunately, where Sprint Nextel is the poster child for mobile WiMAX, any disappointment with its performance will doubtless impact the image of the entire market.
Does this mean that Sprint Nextel is doing something wrong? Nope. You can’t blame Sprint Nextel. Winning in the high tech business is all about innovation and having a high tolerance for risk. Sprint Nextel has mapped out its vision for the future of converged communications and is now making smart moves to put the right pieces in place. Impatient observers, however, need to realize that this type of market development takes time and that Sprint Nextel isn’t the be-all end-all of WiMAX; Sprint Nextel’s near-term progress with mobile WiMAX shouldn’t reflect on the technology more broadly. It shouldn’t reflect poorly on operators trying to roll out fixed or portable services or vendors selling into those opportunities. Mobile WiMAX, after all, is about more than mobile services. and more than Sprint Nextel.
Questions or comments about this column? Please e-mail Peter at pjarich@currentanalysis.com or RCR Wireless News at rcrwebhelp@crain.com.