With cash running low, Sprint's Wimax no sure thing

Michael Morisy
SearchTelecom

Early on, Clearwire, and by extension Sprint's Wimax 4G wireless network, was the darling of the technology press, but the company's future has become somewhat clouded as billions of dollars invested by the likes of Google, Intel and major cable companies are being written off, with soaring expenses and slower-than-expected deployments.

Intel, for example, recently wrote down a nearly $950 million loss on its own investment in the 4G wireless company; Google saw a $355 million writedown on its investment. 

And while Intel, which has invested heavily in chip research that would go to support a Wimax ecosystem, and Google, which has pushed for more open wireless Internet access, cannot be pleased with the downturn in Clearwire's fortunes, Sprint has the most to lose.

"There's some deep pockets out there with Intel and others," said Jack Gold, president and founder of research and analysis firm J.Gold Associates. "Sprint, not so much anymore."

The struggling wireless giant, which is a 51% owner of Clearwire, has continued to hemorrhage customers despite improvements in customer service and success with the budget-friendly Boost Mobile division. Without a successful Clearwire, and the infrastructure to support a 4G network service offering, Sprint may not have a serious wireless future, according to Gold.

"From the U.S. perspective, I think that if they don't get Wimax substantially deployed within the next 12 to 18 months, it'll be too late," he said. "It will be a minor play."

Others are a bit more bullish on the future of Sprint and Wimax, while acknowledging numerous challenges.

"I think it's unlikely that anything major will happen in the near term because Sprint has weathered the worst of the economic changes, and the recovery is in progress," said Tom Nolle, president of CIMI Corp.

And as far as Wimax goes, Nolle acknowledged that Intel's hopes for an easy ecosystem advantage have been tarnished, but he said that the cable companies, including Time Warner Cable and Comcast, have a sizable interest in Wimax's success.

These companies are planning to use Wimax as a pincer move to rout DSL competition, Nolle said. The introduction of DOCSIS 3 for traditional cable pushes the speeds well out of the range of DSL, while Wimax will serve as a lower-cost competitor for customers who do not require high-speed access.

"The people who will really make Clearwire work will be people like Comcast," he said.

Indeed, Comcast has already detailed information about its Wimax services in Portland, although currently it's marketing Wimax as a supplement, not a low-cost replacement, to its cable offerings.

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