Sprint and Clearwire Scrap Wireless Plans as WiMAX Proves Too Risky, says Analysys

(Top News, 15 Nov 2007)

News that Sprint Nextel and Clearwire have called off plans to jointly build a nationwide WiMAX-based network has delivered a significant blow to the WiMAX community, according to market research firm Analysys.

Sprint Nextel revealed on Friday that it would not be following through with the previously announced plans to build a mobile WiMAX network with Clearwire; at least not within the timescales previously mentioned.

"On the one hand, pulling out of the agreement with Clearwire is a pragmatic decision on the part of Sprint Nextel, which is focusing on more immediate priorities of customer retention while it seeks a new CEO. On the other hand, it is a setback for WiMAX in that it both confirms the riskiness of a strategy to move quickly to mobile WiMAX, and it slows the momentum behind WiMAX," said Katrina Bond, principal analyst at Analysys.

According to Bond this is a step backwards for WiMAX, after an otherwise positive year in which several small operators have launched or started rolling out commercial WiMAX services, and Sprint Nextel announced plans to deploy WiMAX for its future mobile broadband services. The ITU decision last month to accept WiMAX as a 3G technology that meets the IMT-2000 requirements was another positive step for the WiMAX community, but it was not enough to give Sprint Nextel's senior management sufficient confidence in their ability to sell the idea of WiMAX to their next CEO.

This latest development could reduce the window of opportunity for benefiting from WiMAX, which will depend on the speed with which it evolves in comparison with W-CDMA and HSPA. Mobile WiMAX and W-CDMA/HSPA are evolving in the same direction and by the time the next generations (802.16m and LTE, respectively) become available (2009 at the earliest), they will be technically very similar. Both mobile WiMAX and LTE use OFDM as a modulation scheme and their supporters are aiming to meet the ITU's 4G requirement of 100Mbit/s data rates in a mobile environment. Furthermore, future cellular base stations are likely to be equipped with both technologies.

"Officially, Sprint Nextel says that it remains committed to WiMAX. However, there inevitably will be speculation regarding whether or when Sprint Nextel may decide to join the growing band of operators, including rival Verizon Wireless, in pursuing LTE as their next generation of cellular network. Although Nextel does have experience in differentiating itself with a different technology to the pack, and pursuing a WiMAX would be an aggressive strategy, the choice of LTE is likely to be viewed as a less risky move by investors," said Bond.

"Similarly, Clearwire remains committed to building a mobile WiMAX network in the USA, and migrating its current network to mobile WiMAX. However, companies wanting to pursue opportunities with mobile WiMAX might find a stronger business case targeting those with the willingness (and ability) to pay for broadband services in developing telecoms markets where competition from existing mobile operators and from fixed broadband networks is less intense," concluded Bond.

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