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11/05/2006, 07:39 AM
#9
There Sprint goes again, playing the role of risk-taking technology pioneer, some two decades after it built the first nationwide optical fiber-based digital network. This time, it's going to use mobile WiMAX as its 4G wireless technology, in order to leapfrog the competition in the race to telecom's future. The big question is whether its plans will give some of its most important partners, major cable MSOs, the jitters about that very future.
The plans are certainly ambitious. In 2007 and 2008, Sprint Nextel, as it's now known, will roll out up to $4.5 billion in mobile WiMAX (802.16e) infrastructure to deliver services over the widespread 2.5-Ghz spectrum it holds. Those holdings cover 85 percent of the homes in the top 100 U.S. markets. It intends to launch trial services in late 2007, and provide widespread deployment for a potential customer base of 100 million people in 2008. [Ed: These services will be able to deliver much of the functionality of a complete unified communications service: voice, video and daa over IP, via a wireless delivery mechanism and to mobile devices, hence the huge market interest].
Intel, Motorola and Samsung will play a major role in the effort. Sprint expects Intel to do for mobile WiMAX what it did for Wi-Fi, using its manufacturing and marketing might to help build a mass market that will drive chip, and thus equipment, prices down. Motorola and Samsung will build dual-mode cellular-WiMAX devices, and be key suppliers of infrastructure equipment.
The move could give Sprint a dramatic technological edge over its most formidable rivals. In the GSM world, where Cingular is the giant foe, the route to 4G is via so-called 3G "long-term evolution," or LTE. But that won't appear until 2010, and won't begin to deliver real 4G capabilities until 2012. As a result, "LTE is too little, too late," says Berge Ayvazian, Yankee Group's chief strategy officer. "Sprint is starting with 4G with a two-year head start."
In the CDMA world, in a way it doesn't really matter what the route to 4G is. That's because Sprint shares that world with a larger competitor, Verizon Wireless. So as long as it follows a standard CDMA path, "Sprint will at best be at a parity with Verizon Wireless," says Ayvazian. "Verizon has more subscribers, more ability to maneuver with content and equipment suppliers."
The last could be particularly important. Being the smaller player means Sprint has no leverage to pressure Qualcomm, the mother of all sources of CDMA technology, to help it build a network more advanced than Verizon's. In short, following the conventional CDMA route could leave Sprint stuck permanently in Verizon's shadow. Only by taking a completely different route can Sprint leap ahead of its huge competitor.
Being a pioneer, though, can have its hazards. "They're the first to commit to a large-scale nationwide implementation of mobile WiMAX technology, two years before the equipment is available," notes Ayvazian. A lot could go wrong in that time as the kinks in the technology get worked out. Given the combination of potential payoffs and risks, Sprint's mobile WiMAX play adds up to a bold, aggressive and risk-oriented move, Ayvazian claims.
Sprint's spectrum ownership may actually have forced its hand, according to Allen Nogee, principal analyst at In-Stat. That's because the government doesn't like to see spectrum lying around doing nothing. "The FCC wanted more information on what Sprint intended to do with the spectrum, so Sprint was under deadline to say what they're going to do with it, or potentially lose it," he says.
The spectrum also may have reinforced Sprint's reasons for going with WiMAX rather than another approach, such as the Flarion flash OFDM (orthogonal frequency-division multiplexing) that Qualcomm is offering as a CDMA path to 4G. In fact, Sprint Nextel evaluated both the Qualcomm technology and the TD-CDMA (time division CDMA) technology offered by IPWireless, and found they worked well, CTO Barry West said at the time of the announcement.
But the flash OFDM had the wrong channel spacing, according to West. It was also available only in frequency division duplexing, while Sprint's spectrum was more conducive to time division duplexing. For its part, the IPWireless technology was "caught up between a current standard and future evolution to 3G LTE," West said. That meant Sprint "wouldn't be able to develop a good ecosystem around it," he added.
Another argument in mobile WiMAX's favor was as much economic as technical. "A lot of companies are going to make mobile WiMAX chips, so the chips would be cheaper than if they went with IPWireless or Flarion's flash OFDM, which would require basically new chip sets," explains In-Stat's Nogee. "The WiMAX chips will be cheaper because there's going to be a lot of competition." Indeed, during its announcement, Sprint repeatedly claimed that mobile WiMAX would offer four times the performance of cellular-based technology at one-tenth the price.
The vendors also likely pushed Sprint towards its decision, according to Farpoint Group founder Craig Mathias. "It's pretty obvious that Motorola and Intel were highly influential," he says. "I think [Sprint] got a good deal, and there's nothing wrong with a good deal. Intel is committing to making the subscriber unit components at a low price. That is undoubtedly the key motivating factor here."
But one possible motive for the move could be downright scary to any cable MSO that gave it much thought. Specifically, once its WiMAX network is in place, Sprint will have the ability to compete directly with cable providers to offer broadband Internet and VoIP services to residences at consumer-friendly prices.
The possibility is particularly intriguing in light of the partnership Sprint announced last November with four leading cable providers. Under the deal, the partners will co-market services and devices that integrate different types of video, wireless and voice capabilities. So the question is unavoidable: how worried should those partners be about Sprint's plan?
"Absolutely, some of the partners may see them as a potential competitor," says Godfrey Chua, wireless and mobile infrastructure research manager at IDC. "It's something that Sprint Nextel will have to manage, because the cable TV industry is a key partner for them."
Or perhaps the partners should see nothing but opportunity. After all, WiMAX will give Sprint a way, and a reason, to dramatically expand its relationship with cable operators. The enormous, cheap data capacity will make it easier to deliver to the handset all the video content and services the MSOs are currently providing to the home.
"Obviously one of the key applications [for a future Sprint WiMAX service] will be video, so content will have to come from these partners," notes Chua. "The point is that on one hand there is the risk of some overlap, but on the other hand you still can't deny that this amplifies the level of partnership they need to have with the cable TV industry, because that content is going to be very important."
Anyway, both sides for now seem to be focusing on the potential for cooperation as oppose to competition. Sprint CEO Gary Forsee said during the WiMAX press announcement that Sprint's cable partners "have been very much aware and involved in our 4G planning at both the technical level and at the business level." And Sprint is bidding in partnership with three cable companies in the FCC's auction for so-called Advanced Wireless Spectrum (AWS).
Guess that settles it, then. Sprint has been talking with its cable partners about its WiMAX plans all along. Those must have been some interesting discussions. And the internal talks among cable MSOs that aren't Sprint's partners would have been positively riveting.
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Originally Posted by xenophonite
I can't argue with that. I can't wait until it rolls out. Didn't they start building it into laptop chipsets for IBM?
