Sprint details WiMax plans, to offer access via millions of device chips

Company to invest $5B in 'Xohm' wireless network through 2010

Sprint Nextel Corp.'s planned WiMax service, now dubbed Xohm, will launch in the Chicago and Washington/Baltimore markets by year's end, then reach 100 million users nationwide by the end of 2008, company officials said today.

The secret sauce behind the Xohm (pronounced Zoam) service will be its ability to connect laptops, phones, handhelds and millions of consumer electronic devices wirelessly using standard WiMax chips from Intel Corp. and other manufacturers, said Barry West, Sprint's chief technology officer, during a Web conference for reporters and analysts.

Sprint has commitments from its chip partners to embed 50 million WiMax chips, with prices of $5 to $15 apiece, into devices within cars as well as cameras, laptops and other equipment over the next three years, West said. Users will click on WiMax access from the device and "come to our network," he said.

The Xohm network will operate as open access, meaning that all WiMax-certified devices will be able to operate on the network, West added. Devices will not need an additional carrier certification, just the one from the device maker.

Sprint's challenge is that "we have to give [users] attractive services and pricing to get the users to attach to our network," West said. "I am convinced this model can work ... offering the mobile Internet. This is a game-changing business model."

Many ingredients are involved to make Xohm work, including Sprint's partnering in July with Google Inc. for Internet services and with Clearwire Corp. to build out a WiMax network, said Sprint CEO Gary Forsee.

From a financial perspective, Xohm will generate between $2 billion and $2.5 billion in revenues in 2010, but first the company expects to invest $2.5 billion in capital expenses through 2008, and another $2.5 billion by the end of 2010, said Paul Saleh, chief financial officer.

Forsee described Xohm as low-cost wireless service with up to five times the speed of 3G wireless, at rates of 2Mbit/sec. to 4Mbit/sec. and even up to 10Mbit/sec. Sprint will have WiMax "before anybody else" with a two-year advantage. "Our competitors are in WiMax denial," West added.

West and Forsee described two ways Sprint expects to earn revenue from Xohm. One is through monthly subscriptions for wireless cards, which are similar to wireless broadband cards, and the other is through pricing for individual wireless session services, such as a video or a game.

Sprint expects to keep its costs low because it will operate Xohm on 2.5-GHz licensed spectrum, which Sprint already controls. That means Sprint's buildout will take far fewer access points than a network built in the 700-MHz spectrum that's being sold at auction next year, West said. He estimated it would take 10 to 15 times as many access points for a new provider winning 700-MHz spectrum to build out access points than for Sprint to build out Xohm.

Compared to Wi-Fi, Xohm will be overlicensed spectrum, avoiding potential interference in Wi-Fi's unlicensed band, West said. He predicted that corporations will be encouraged to build WiMax hot spots instead of Wi-Fi hot spots "but without all the interference issues."

West said his experience with municipal Wi-Fi from the city of Alexandria, Va., has so far been a "disaster" because of congestion and an "indifferent" provider. But in the case of Xohm, Sprint would "own the spectrum, it would be managed, and you'll be in a relationship with us."

For some time, West said that dual-mode laptop cards that work in both WiMax and over the EVDO wireless network will be in vogue, as WiMax grows. Sprint plans to sell dual-mode cards, and a Xohm unit of the company will market WiMax-only cards, he said.

Industry analysts said Sprint's ambitious plans will require careful execution to succeed. WiMax looks "very promising" for Sprint, said Jeff Kagan, an independent analyst. "How successful [Sprint] will be ... is still a question that won't be answered for several years, but ... the company is heading in the right direction."

Another analyst, Jack Gold at J. Gold Associates in Northboro, Mass., said Sprint is "way ahead in the U.S." with WiMax because it has the most wireless 2.5-GHz spectrum to deploy it on, while AT&T Inc. and Verizon Wireless "don't have anything comparable."

"The challenge will be building out the network infrastructure and charging for services at a reasonable rate that consumers and business will not balk at," Gold added. That means the service will probably have to be comparably priced to DSL and cable modem access, he said.

"Within the next two years, there will be a big demand for WiMax, driven in large part by Intel," which will make WiMax chips available for ... mobile systems at a "fairly low cost" by late 2008 or early 2009, Gold said.

Copyright © 2007 IDG Communications, Inc.

7 inconvenient truths about the hybrid work trend
Shop Tech Products at Amazon