$3.2 Billion WiMax Deal Goes Through. Take Cover.

Trackbacks/Pings (Trackback URL)

1. MyMesh.com
   

   May 6th, 2008 at 11:33 pm

   Impressive.. and the nets will be more fun, soon…

2. Paul Kapustka
   

   May 6th, 2008 at 11:33 pm

   Actually, the business of WiMax is pretty sound —
   in our research report on Xohm and WiMax we spell out the details of why it has lower capex and opex than competing wireless broadband technologies, and why the Sprint/Clearwire spectrum assets make the Comcast/Google/Intel investment about an even bet.

   And now that Sprint is not there to muck up the marketing, doesn’t it stand a better chance?

3. martin english
   

   May 6th, 2008 at 11:40 pm

   1.00 + 1.00 + 0.55 + 0.50 + 0.10 12 (OK, i checked using the windows calculator, so it may be correct…)

   WHO says it’s worth 12Billion ? The market ? phht

4. Evangelist
   

   May 7th, 2008 at 12:00 am

   I liked your last statement… ‘technology is very promising. Unfortunately, the business is not’

5. Steve 'Chippy' Paine
   

   May 7th, 2008 at 1:31 am

   ‘Deal goes through’ != ‘Expected to go through. ‘

   Interesting story tho.
   S

6. Derek Gathright
   

   May 7th, 2008 at 1:38 am

   “Here’s where that logic breaks down: Verizon and AT&T have a huge head start and customer lock-in when it comes to cell phone service.”

   Congrats on the TechCrunch dumb comment of the week. I’m sorry, but contracts only last so long, Sprint knows this better than anyone as they’ve been bleeding customers since the Nextel merger. Hell, they’re about to lose me, a 10 year Sprint customer to AT&T simply cause I want an iPhone and I can’t get one with Sprint. Wireless customers aren’t loyal, they’re fickle. When was the last time you heard someone say “OMG, I absolutely looooove my cell phone carrier, they do everything right, and their customer service is amazing!!!”? Yeah, you’ve never heard that. EVERYONE bitches about their cell phone carrier and is looking for a good reason to jump ship. Problem is the carriers never offer anything substantially better than the competition, then the iPhone came along, and now the next game changer is WiMAX & Android.

   The potential of WiMAX in incredible, but whether they can actually pull it off or not is a whole other story. If they can, WiMAX isn’t about the next 4G voice network, it’s about the first true data network. We’re talking broadband speeds, nation-wide. Intel is going to put WiMAX chips in everything from Laptops, to Kindels, to toasters, and Clearwire gets a monthly cut of all that. Wherever you get cell phone service now, you’ll have a 10-70mbit internet connection. Imagine the possibilities. It will be amazing, a total game changer. No more crappy, choppy Qik live feeds. All the live streaming video you want will all be crystal clear. And with everyone & their moms having an Android or an iPhone, the media capabilities of these mobile devices will be like nothing we have now. We’re not talking about cell phones anymore, we’re talking about ultra-portable mobile computers that everyone will be using, and they’ll all have faster internet access than what most people have going to their homes.

   I agree with you that this project might be difficult to pull off and they’ll have to quickly work through the technical problems they’re bound to run into in the first couple years. I also question the value of having the cable companies on board cause I think they may be more trouble than they’re worth. But, assuming the network is stable in two years, that’s a 2-3 year headstart Clearwire has on the rival LTE networks that aren’t supposed to launch until 2010 at the earliest. If they can promise stable WiMAX speeds (10-70 mbit), consumers will ditch AT&T, Verizon, and T-mobile the first chance they get. Clearwire will be printing money.

   Develop the right technology, and winning wireless customers will be easy.

7. TortMan
   

   May 7th, 2008 at 1:42 am

   Well Sprint should be careful and clean up its act.. what with all the user-generated class action lawsuits piling up.. !!

   http://www.sueeasy.com/litigan.....detail=200

8. TortMan
   

   May 7th, 2008 at 1:44 am

   And AT&T as well.. these phone companies don’t give a rats ass about poeple’s concerns..

   http://www.sueeasy.com/litigan.....detail=229

9. acme
   

   May 7th, 2008 at 2:26 am

   Weird… where Erick sees disparate interests among these companies, I see convergence.

10. Siddharth
    

    May 7th, 2008 at 2:33 am

    After all the Wimax will go public in US, but I think there are too many partners in the new company, the job is big but they are too many!

11. richard@infonetics
    

    May 7th, 2008 at 2:46 am

    I agree with Mr Gathright above on many of his points: the potential of WiMAX is incredible. We are not talking about a new ‘cellphone network’ which seems to be what the TechCrunch argument was — if so, then yes, it would be a dumb idea, and yes, AT&T and Verizon would have a huge head start.

    WiMAX is much more than this: it is the Internet on mobile devices . . . the actual Internet, not the largely disappointing lightweight version of the Internet that 3G promised but has not (yet) truly delivered. This means data, at speeds comprable to what we currently get over DSL/cable broadband, but to a mobile device (note I didn’t say ‘phone, though it will no doubt also handle voice calls using VoIP).

    This means: mobile video, multimedia applications, mobile online gaming, social networking (YouTube on your mobile handset etc), video conferencing for consumers, always-on connectivity for mobile workers, rapid file transfer, collaborative working, unified communications etc for enterprises, and also mobile applications such as instant video surveillance streaming to emergency response vehicles for public services, as well as a whole host of new applications not even dreamed of, and far beyond the imagination of this humble blogger.

    In short, next-gen mobile networks will be DIFFERENT, so there is little point in comparing them to current 3G, voice-centric mobile networks. In this respect, Sprint has a head start on AT&T and Verizon, which are pursuing LTE as their 4G technology. One point not yet mentioned is that LTE is not yet even standardized, so this technology is still some way off. Whilst AT&T and Verizon might try to accelerate their LTE rollout (a clear sign that they understand the potential threat of WiMAX), it is also going to take time for them to get LTE equipment rolled out, and even longer to get an ecosystem of devices and applications to offer compelling services.

    So righting off WiMAX just months after a modest soft-launch seems a very, very short-term perspective. After all, it has taken the industry 15+ years to get to the level of cellular coverage and performance that we currently have. Sprint is trying to deliver WiMAX in a much shorter time (ok, much has been learned about rolling out mobile networks over that period, but even so, cut them a little slack I would suggest). And yes, it is going to cost a lot of money. A LOT OF MONEY! Did you think cell networks were cheap? Even today, 2G GSM networks require investment, so WiMAX investment will have to continue for many years to come. Just like the road network, a mobile network is never truly ‘finished’; it needs money spent on it to accomodate more cars, just as mobile networks need more bandwidth added as subscribers ramp up. WiMAX is no more expensive than cellular or LTE in this respect, arguably less so.

    In this respect, Sprint is doing the right thing in partnering with some powerful, deep-pocketed allies. On the surface of it, they may make for strange bed-fellows but think on: cablecos (content + subscriber base) plus Intel (WiMAX mobile devices) plus Google (Internet services, strong brand) = a WiMAX ecosystem, or at least a significant beginning of one. Nationwide cellular network was not achieved by one company alone, and WiMAX will be no different.

    I am neither pro-Sprint or anti-Sprint but as an industry analyst/observer they are doing some things right (yes, I am aware that is not a frequently-heard statement lately!) Other than wisely seeking investors, they have selected vendors with a pedigree in mobile networks AND most importantly, mobile devices (Moto, Nokia-Siemens and Samsung), which between them have launched WiMAX handsets, CPE and new form-factor ultra-mobile PCs (which are particularly sexy little numbers, likely to have major consumer appeal if/when the price comes down). So the ecosystem is materializing, meaning that not everything rests on the sagging shoulders of Sprint.

    And yes, Sprint IS right to continue to pursue WiMAX. Giving up at this early stage would be to blow their big chance. They are the #3 wireless player in the US, some way short of their competitors, and have some major challenges. But they have an advantage — spectrum. WiMAX is Sprint’s means of utilizing that asset and build out a network that goes beyond anything that AT&T and Verizon have or will have for some years to come. In so doing, it is a major opportunity to steal/build subscribers, ramp revenues and postiton themselves at the forefront of 4G in the US. It is a bold strategy, not without risks (now shared by others), but a positive one and should be applauded.

    If your business were under the same pressure, but you had a secret weapon, who you try to use it, or just crumple, shrink away from the competition, sell off assets, and retreat under a rock?

    I can’t wait to see what the TechCrunch journalist will be writing about WiMAX in 2-3 years time (ok, let’s assume he still has a job!) He, like WiMAX, may be up to speed by then, and will likely be writing articles on the fly from a trade-show floor on his ultra mobile PC, and sending them in over a WiMAX connection. And the article? Why, bitching about how slow and expensive the rollout of LTE is, of course!

12. Uhh
    

    May 7th, 2008 at 2:58 am

    Wimax is worth more than that, when it becomes popular, you can say goodbye to phones and welcome voip to all. E.G. Skype Phones. People wont ask phone numbers anymore, they will ask usernames.

13. Rakhi
    

    May 7th, 2008 at 4:43 am

    These phone companies and broadband wireless mobile companies will have tough competition, long way to go. Google has also thrown its hat into the ring. This will provide giant phone companies to play their cards tactfully. good convergence is accepted.

14. George
    

    May 7th, 2008 at 5:27 am

    This saddens me. We’ve been stuck with Clearwire for nearly a year, and when our contract runs out in the next couple of months we will be thrilled to be rid of them.

    They are so against file sharing that not only do they throttle BitTorrent traffic of all kinds, but they actually slow down and usually terminate any upload that takes more than a minute or two. As a web developer, I frequently have to upload semi-large files, and have found it impossible to upload anything over 20MB on Clearwire. I literally have to take my laptop to my house and use my TWC connection to upload any file over 20MB.

    The VOIP service leaves much to be desired as well, in that we often come into the office in the morning to find that the modem needs to be reset, and any callers have been directed straight to voicemail. Voice quality is fine though.

    I can only hope that the combined company has a more reasonable policy.

    For anyone considering Clearwire, run like hell.

15. anon
    

    May 7th, 2008 at 6:27 am

    Take note: the planned network will only cover 120-140m pops by end of 2010. That’s less than 1/2 the US population and a tiny (less than 5%) of US land area. Why so little? The spectrum has a lot of capacity but not as much range. Verizon’s LTE build will happen at 700 MHz. More range but less capacity. So we’ll see if people value coverage over speed or speed over coverage. [Roaming to Sprint’s 3G network at 1900 for rural coverage is a second-best option, for one thing it means all of the devices would need to have CDMA chipsets…doesn’t that ruin the point of WiMAX?]

16. jro
    

    May 7th, 2008 at 7:17 am

    “As I said before, this is a disaster waiting to happen.”

    Erick - I’m playing devil’s advocate — what are the alternatives? I don’t see anyone else trying to build out anything. You have to start somewhere.

17. Derek
    

    May 7th, 2008 at 7:28 am

    “Take note: the planned network will only cover 120-140m pops by end of 2010. That’s less than 1/2 the US population and a tiny (less than 5%) of US land area. Why so little?”

    Give it time. One reason the cable companies are involved in this is for the “last mile” customers that they can’t get internet too since it would be cost-prohibitive. They are banking on full coverage, way out in the boonies.

    It’s not like LTE will have any more coverage in 2010. We’ll be lucky if it has even been brought to market by then.

18. Ferodynamics
    

    May 7th, 2008 at 7:47 am

    All I can say is, my Ricochet modem on the beach was fun while it lasted.

19. grumbs
    

    May 7th, 2008 at 8:26 am

    WiMax isn’t about competing with AT&T and Verizon by 2010. It’s about changing the game, as Derek Gathright put it, 5+ years from now.

    We had this conversation in our office last week. We run a streaming music service that is nearly 100% dependent on high-speed broadband, 99.9% of it over fixed cables. In 5 years, we expect it to have a large percentage (half?) of that to become mobile-based. 5 years from now, 99% of media streaming will be functionally available, although not necessarily delivered, wirelessly. That’s why Comcast and Time Warner are investing.

20. Erick Schonfeld
    

    May 7th, 2008 at 10:09 am

    Actually, grumbs, Comcast and Time Warner just care about competing with the telcos. They are happy with the game the way it is.

    Look folks, I believe in the promise of WiMaz as much as the next guy. I just don’t believe in Clearwire. Like I said, I hope to be proven wrong and if I am I’ll be happy to write how great it turned out. But, um, richard @11, I can write articles from trade floor shows now (with my $60/month Sprint EVDO card).

    There’s hype, and there’s reality. Any actual Clearwire customers other than George @14 who can tell us how WiMax stacks up against other broadband alternatives, both wired and fixed line?

21. WasA TC Reader
    

    May 7th, 2008 at 11:00 am

    Eric is full of sh*t

22. watch out
    

    May 7th, 2008 at 11:04 am

    Keep an eye on this…while the consortium has some strong names don’t forget Clearwire brought over alot of folks from Amp’d Mobile including Peter Adderton (i.e., “how can we squander & blow $350MM in 12 months)…

23. Polle
    

    May 7th, 2008 at 12:05 pm

    Wimax is nothing more than one more wireless waveform. It is already a proven disaster compared to LTE, with one major deployment being abondoned to the scrap heap because it plain didn’t work. To quote” Non-line-of-sight performance was non-existent beyond 2km”.
    The reason is that it was designed by people with NO mobile radio experience. They can’t even do link budgets to figure out how many kilowatts a mobile phone would have to transmit to make 30km range with Wimax.

    Not only is the Wimax waveform standard ill-considered, there is no viable network mobility concept - again because the proponents have zilch experience in this area. What about Sprint? Well, don’t they have a history of making the wrong technical choices, and that is why their service is so awful now?

    The third major parameter is capacity. Bandwidth per user is one thing, but how many simultaneous users per cell can it support with that bandwidth? The answer, for Wimax, is … a pathetic ONE.

    No wonder Verizon, ATT-Cingular and the rest of the world is going with LTE.

24. KwangErn
    

    May 7th, 2008 at 12:15 pm

    Imagine moving from one place to another and realised that the limitations of WiMax just cut your connection off while having an important chat over Skype, for instance.

25. Affiliate17
    

    May 7th, 2008 at 8:07 pm

    great post

26. jmo
    

    May 9th, 2008 at 9:12 am

    OK you tech geeks dont see beyond the techwall. here is whats up:
    Craig McCaw built what is todays AT&T wireless network. He sold it for 10B and took some time off and now has built Cearwire. Comcast has been buying wireless from Sprint to compete againt AT&T and Verizon’s triple play. That business model (reselling wireless) is too expensive. Comcast needed to buy a stake in a wireless company to better compete. The Clearwire deal needs to happen before the demos take office. It is another brilliant move by McCaw to build a superior network and the sell it to Comcast once completed. The genius about this is that McCaw builds the network with other peoples money and then sell it to them.
    No wonder the guy has everything.