Sprint: 'We are the 800-pound gorilla in WiMax'

Cites 'first mover' advantage

Sprint Nextel Corp. believes its decision to select WiMax as its fourth-generation (4G) wireless technology will put it at least two years ahead of competitors' mobile broadband networks based on the two other 4G flavors.

Sprint argues that Long Term Evolution (LTE) -- apparently favored by the widespread GSM operator community -- and Ultra Mobile Broadband (UMB), from the CDMA2000 advocates, will take so long to bake that WiMax will become the de facto 4G standard.

"We are already testing equipment. [It] will be fully stable and deployed to 100 million [users] by the end of next year, and there won't be a sign of any of these other technologies," said Barry West, Sprint's chief technology officer and president of the carrier's 4G mobile broadband business unit, at this week's CTIA Wireless 2007 conference. "So I think first-mover advantage here is extremely important."

Key to Sprint's motivation is the formation of an ecosystem of chip set makers and device manufacturers to embed those chip sets without subsidies from the network operators, as is the case in the cellular world, West said. Low-cost WiMax chip sets mean device manufacturers do not have to be persuaded to embed them into their products through operator subsidies to get them to market.

"The old cellular model of operators subsidizing devices has to go away," West said. "With [Evolution-Data Only] and [High Speed Packet Access], heavy subsidies are being made to the PC OEMs to actually embed those technologies. Without that low-cost chip set structure, it's very difficult to make the whole ecosystem work. So that's the fundamental difference."

Another is Sprint's influence in driving the market, West said.

"We are the 800-pound gorilla; we are defining where it goes," West said. "That's a position we're used to with our relationship with Motorola and the iDEN technology."

Motorola made handsets for Nextel's iDEN push-to-talk network. Sprint acquired Nextel in 2005 for $36 billion, which is when West, the chief architect of the iDEN network, joined Sprint.

Influence aside, LTE and UMB are just taking too long to gestate, West said.

"WiMax is at least two years ahead of these other technologies," he said. "WiMax has been out there for a while with [the IEEE standard] 802.16d, so it has quite a history, whereas LTE and UMB will be a new venture for both development communities. We're already building a huge ecosystem that will have a jump-start before anyone else even gets there.

"The GSM community will point to how many GSM networks there are," West continued. "But you have operators in the world already saying that if LTE is delayed much more, then WiMax will become a de facto standard. And I honestly believe that's what's going to happen."

Despite reports from the financial community that Sprint's WiMax rollout is subject to significant delays and cost overruns, West said everything is on schedule. Chicago and Washington are on tap for trial service this year, and Baltimore is scheduled for next year. By the end of 2008, WiMax will be available to 100 million users, he said.

The 12 new markets announced earlier this week bring the current total to 19, or 25% of Sprint's market, that are due to have WiMax service in the first half of next year, West said.

Similarly, the churn situation going on with Sprint's iDEN subscriber base is having no negative impact on the carrier's WiMax schedule, West said. Sprint lost 306,000 postpaid subscribers -- the bulk coming from the iDEN network -- in the fourth quarter of 2006, a rate of 2.3% per month, compared with 1.5% for AT&T and less than 1% for Verizon Wireless.

Some of those customers are moving to Sprint's higher-capacity CDMA network via hybrid CDMA/iDEN PowerSource handsets and QChat push-to-talk service for CDMA. But others are going to competitors such as Verizon Wireless, AT&T, Alltel and T-Mobile, analysts noted.

Sprint plans to cap investment on its iDEN network at the end of this year -- the same time it plans to complete its CDMA upgrade to the higher-speed EV-DO Revision A. Sprint then plans to overbuild 60% to 65% of the CDMA network with WiMax, West said.

"When you look at WiMax ... we can generate a bit for about one-tenth the cost of a bit on the CDMA network," he said. "So you really want to deploy that where the high-capacity demands are. Where we don't have the WiMax network -- for those people that want the ultimate coverage -- we'll have complete interoperability between Revision A and WiMax. So the services will move seamlessly on the device between them. But 65% of Internet access coming from mobile broadband devices in a WiMax footprint is a fairly substantial business. So they do coexist."

This story, "Sprint: 'We are the 800-pound gorilla in WiMax'" was originally published by Network World.

Copyright © 2007 IDG Communications, Inc.

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