November 12, 2007 4:00 AM PST

Can WiMax make it in the U.S.?

With Sprint Nextel and Clearwire suspending their partnership to build a new nationwide wireless network using WiMax, the future looks precarious for the much-hyped technology that was supposed to revolutionize the mobile Web.

On Friday, Sprint Nextel and Clearwire announced that they had dissolved a deal signed in July to join forces and build a next-generation wireless network using WiMax technology. Together, the companies were supposed to share resources and the cost of deploying a new fourth-generation wireless network to reach about 100 million users in the next few years.

While the companies have said they are still committed to building their networks separately, the news throws into question whether they'll have the money or shareholder backing to actually get the networks built. And without a nationwide network in one of the largest markets in the world, the WiMax revolution could come to a standstill.

"There will be a fourth-generation wireless technology," said Craig Mathias, principal analyst with Farpoint Group. "But WiMax was never a slam dunk as the clear winner. As a technology, there is nothing wrong with using WiMax, but I think the market will evolve slowly over a long period of time."

"WiMax is a very good technology. But it's competing with a lot of other technologies."
--Craig Mathias, principal analyst, Farpoint Group

Still, companies like Intel, which is a technology partner of Sprint's and a financial supporter of Clearwire, say they will continue to roll out new WiMax products as planned.

"We are still moving forward with our next-generation Centrino chips for notebooks and our silicon for ultramobile PCs," said Kari Aakre, a spokeswoman for Intel. "We're disappointed that the agreement didn't work out, but we are committed to continue working with each of them on their WiMax initiatives."

Like so many other technologies that have come before it, WiMax has become a victim of overhype. Many have described it as Wi-Fi on steroids because of the fast broadband transmission speeds it can deliver.

But unlike Wi-Fi, which transmits in a radius of 25 feet to 100 feet, WiMax signals can travel miles, making it more similar to cellular-phone technology. And because WiMax uses wider frequency channels than current 3G wireless technology, it uses wireless spectrum much more efficiently, which should help reduce the cost per bit of delivering data over its network.

It's this combination of features that has fueled the hype machine that has turned WiMax from just another wireless technology in a carrier's toolbox into the savior for the wireless Web.

While no one disputes that WiMax is a useful technology, the real question is which markets it's best suited for. For example, most wireless experts agree that WiMax is hugely useful in developing countries, where little to no wireless or traditional telephone infrastructure exists.

But it's unclear whether the technology can become a major player in a developed market like the U.S., where regular broadband is plentiful and cheap and 3G wireless networks already blanket most major metropolitan areas.

Cisco Systems, which threw its hat into the WiMax ring last month when it announced that it would buy WiMax equipment maker Navini, sees a much bigger opportunity for WiMax in emerging markets, such as Africa and Latin America.

"We bought Navini to build networks for the emerging markets," said Jeff Spagnola, vice president of worldwide service provider marketing for Cisco. "In most developed markets, WiMax will be used selectively. But the developing world is a Greenfield opportunity. They don't have the infrastructure to begin with, so it's much easier to provide coverage in those areas than to try to fit into some existing wireless model."

Intel and Motorola also see opportunity in the developing world. But Joe Nardone, general director of Intel's WiMax, team said that WiMax is also an attractive technology for mature markets, which will eventually need more capacity than 3G technology will be able to deliver.

"At some point the carriers will have to make a forklift upgrade to get to the next level," he said. "And WiMax provides the capacity and efficiencies that make it a good choice for their networks."

CONTINUED: Fate in the hands of investors…
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8 comments

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Technological barrier ?!?
Is there really a technological barrier of are we just seing some propagada designed to protect the communication industry? I think a lot of people would prefer WIMAX not going omni present because it's going to force a lot of changes that could transform the communication mediums and their business models as we know them today.
Posted by equisoft (1 comment )
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Exactly
I think that you are correct in that the omni-presence of WIMAX would break the existing business models - with this in mind, it is clear to see that we are slaves of the corporations and government.
Posted by USDecliningDollar (243 comments )
Link Flag
Not all-or-nothing. There's a place for WiMax
The most successful networks and network business models are typically those that can most flexibly deliver a mix of high value applications, content, and services. Voice is increasingly a commodity, and 3G voice network providers face the prospect of becoming "dumb pipes" with low profits. Certainly, providers in the most mature European markets are already seeing difficulty in replacing declining voice revenues and profits with premium data services on their networks. Service providers need WiMax because it is much better suited for these applications. In addition, WiMax's economics are much better for aggregating rural traffic and bringing broadband connectivity to many under-served regions in the US. The UDS market is big, and certainly not homogenous, requiring a mix of technologies and network designs.
Posted by bobpanoff (2 comments )
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Some minor errors in the story
Hi,

there are a few minor errors in the story.

Mobile WiMAX was certified by ITU as a 3G technology (not 4G). Also Mobile WiMAX delivers peak data rates between 30 and 38Mbps (depending on how you configure the TDD asymmetrical properties). This does not qualify Mobile WiMAX as 4G (defined as peak data rates >100 Mbps).

The next evolution of 3G (HSPA) coming in the 2nd half of 2008 will deliver peak data rates of 28Mbps (almost the same as Mobile WiMAX) and after that peak data rates of 42Mbps (faster than Mobile WiMAX) in late 2009.

LTE will arrive in the market late 2009/early 2010 (not 2012) and deliver peak data rates up to 150Mbps.

UMB is a little later than LTE, arriving approx 1 year later.

Mobile WiMAX was always going to have a tough time in the markets where 3G has already been rolled out (except in some niche scenarios) and now it looks like it will have an even tougher time.

/Mike
Posted by mikebeg (2 comments )
Reply Link Flag
We should not worry to much over Sprint's fallback
The media is viewing Wimax as being a ISP technology. I believe that Wimax will be adopted by businesses and consumers as well.

I think the media is overreacting to the Sprint's decision to call off it's Wimax alliance with Clearwire

Wimax is new and the so is the supply of new equipment. So this drives up the cost for new buyers of Wimax equipment. Carriers and businesses will adopt Wimax as they begin to realize the benefits and potential profits.
Posted by rshimizu12 (98 comments )
Reply Link Flag
Technology shakedown
It takes time until a technology gets attention.
Investors are shrewd enough to wait until a tilting point comes up. Some people like to believe data rate is the only way to measure new wireless technolgies, WiMAX, LTE, or UMB. But there are interoperability and adaptability that will be more missiion critical. Investors always want something visible, and for now, WiMAX does not have its flagship mobile equipment in the marketplace, which keeps wary investors blind to the bright future of mobile WiMAX. Every good investor doesn't have to a visionary but has to be an opportunist.
Posted by Quemannn (76 comments )
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Woe to WiMax naysayers
If it is a viable technology then why not pursue it. I will tell you why, because nobody wants to give up the already terribly intricate web of hotspots all over the place that users get screwed on. It is very difficult to go anywhere wirelessly. Can you be on the move and find a spot that is available through your carrier? Sure...but WHERE? It is a pain for anyone out in the field to find 'A' solution. You would have to spend, under the current "blanket" and average of $42 to $49 a day using daily log in plans or $60 to $100 a month to subscribe to multiple carrier plans for monthly access. What these companies need to do is regionalize their buy in into WiMax and engage in revenue sharing, but thatt is an impossible dream because nothing is for the greater good of the American people and its businesses anymore it is all about greed and who can be the next billionaire with a moon rocket in his backyard. What happened to the greater good? Just like Barron Hilton deciding to donate what would have been Paris' inheritance to a charitable group...WHY??? If Im that old and I am going to give that much money away ($1.5B) then I would get my butt out on the street and look and see where I could apply it where it would most benefit the people of this country. Anyways I am off-topic...my apologies...
Posted by samhyatt76 (1 comment )
Reply Link Flag
Re: the article " Can WiMax make it in the U.S.?"
Those of us in rural areas without cable, or outside the distance limitation of DSL have only satellite technology to even come close to high-speed internet service. Has anyone in the WiMax industry bothered to do a market survey of those of us in these areas? I agree that the "big-city" folks have ample choices for their broadband needs, but the rest of us need some help.
Posted by carlconger (1 comment )
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