My Thoughts On Clearwire / Sprint And The Five Dwarves

I just read an analysis of the Clearwire / Sprint Mobile WiMAX deal that was so flawed that I decided to break radio silence and offer my thoughts.

It's gonna work. McCaw's gonna make it work. McCaw has enough star power that he can rope in other players and with this deal, he has leverage of the controlling the vast majority of US 2.5 GHz spectrum and the certainty that if Mobile WiMAX is going to happen on any appreciable scale in the US, it's going to happen, or not, through McCaw.

Those preferred system vendors that Sprint selected? That doesn't mean squat now. A classic play out of the McCaw wireless playbook is to pit multiple system vendors against each other. That'll certainly happen now - again, McCaw has the leverage now, not Sprint. The wisest will do business with McCaw... but will count their fingers after the handshake.

Why will "New Clearwire" work? One of the biggest reasons is that Mobile WiMAX really is different. It's the first wireless system of the Internet era, built for providing Internet Access, that's actually designed to be deployed on a large scale. The wireless telephony systems have, yes, been "extended" for Broadband, but at the core those systems have all the overhead, expense, and inefficiency of the telephony network. Mobile WiMAX is to wireless telephony (cellular) what Voice Over Internet Protocol (VOIP) is to Plain Old Telephone Service (POTS).

The wireless telephony players have always touted that their systems could be used for all manner of small devices - the classic example is a cold beverage machine. Why doesn't every such machine have a little wireless module that lets it "phone home" when it needs restocking? Mostly because it's too darn expensive to make a deal with the wireless telephony companies. To them, every device on the network is, essentially a telephone. To send a one-byte message of "Need to be restocked with Diet Coke" incurs the same overhead as a phone call. The device has to be "managed" on the network the same way as a wireless phone user. Etc. On a Mobile WiMAX network, that same application is very efficient. The module in can signal "asynchronously" when it needs to report, and it's fully accessible from the home office - it's just another IP device on the Internet. Mobile WiMAX is built for these kinds of applications, so the cost can be incredibly lower. I'm guesstimating here, but that one device might cost $10/month on wireless telephony... but $10/year on Mobile WiMAX.

And devices is where the real money is. Think how much it's worth to monitor all manner of things. Alarm systems, for one thing - that's an enormous pain for the alarm companies to deal with landlines at all, but it's worse to deal with wireless telephony companies. Meter reading is another application. Monitoring all the "pieces" in the electrical distribution system that aren't monitored now - that's a huge application all by itself, but that's a "we're only willing to spend that money once" investment.

I've said this before, but it bears repeating. When you're building a network that handles Mbps, the Kbps apps practically come along for free. That includes phones. Voice is a trickle of a few Kbps on Mobile WiMAX - the load practically isn't noticeable. So imagine the pricing you could do on a prepaid phone on Mobile WiMAX - unlimited use for $25/year? Think that would change the wireless telephony game quickly?

The danger in the Mobile WiMAX duopoly of Clearwire and Xohm was that Xohm, being a creature under the control of Sprint, would be held back from competing too aggressively with Sprint, like that theoretical unlimited use $25/year price point for a voice handset that would cannibalize the profitability and usage of Sprint's CDMA network . But now that there's no more Xohm, all such niceties are off the table. The only concession Clearwire has to make to Sprint is on the CDMA/Mobile WiMAX dual mode phones. Those are a necessary evil as the Mobile WiMAX network is built out, and so pricing on those won't be able to be very aggressive. But as soon as there's enough scale of Mobile WiMAX, McCaw's pricing gloves come off.

Can Mobile WiMAX become the third pipe? Oh Yes! What people just don't get is that they keep thinking that Mobile WiMAX users... must... be mobile. Nope. There are a number of vendors - Redline is one that has very impressive "fixed" Mobile WiMAX "Customer Premise Equipment right now - that are going to make "fixed" Mobile WiMAX gear that will provide high bandwidth, reliable connections. Mobile WiMAX can do both the fixed role and the mobile role equally well. You see, in doing implementing mobility, you have to give over a lot of capacity to making the mobile connection reliable. If the connection is sitting in a fixed location, you don't need all that overhead and the connection speed can go way up. Not to mention that the antenna can be a lot better - higher gain, longer range, better signal-to-noise ratio, etc. Wireless telephony wasn't good enough / cheap enough / good enough coverage to directly displace landlines, but Mobile WiMAX is good enough to displace a heckuva lot of DSL... and T-1's... and yes, cable modems. The only real competition that Mobile WiMAX has is fiber.

I'd love to go on, but you get the idea that there's a lot more potential to Clearwire / Sprint than meets the eye. And I'd love to keep writing - I haven't found anything more fun or interesting. But as I said, as much fun as this is for me to write, and you to read, in the end no one was willing to pay me to be able to keep doing it. So, best of luck Clearwire, and Sprint (RIP Xohm). It's gonna turn out pretty well, I think.

By Steve Stroh

This article is Copyright © 2008 by Steve Stroh except for specifically-marked excerpts. Excerpts and links are expressly permitted (and encouraged).

This article was written and posted via Broadband Wireless Internet Access (BWIA); Clearwire service using a NextNet Wireless / Motorola Expedience Residential Service Unit (RSU).

Comments

[Willlie LU]

Theoretically, Mobile WiMax does not work. Of course, it depends on how to define "Mobile". If you just move from kitchen to bedroom, it works.

Also, it depends on capacity requirement. If you low down the capacity requirement, any wireless technology can work (if erlang is 1).

So I never believe Sprint can do anything great?

[Bob Syputa]

The operators and suppliers that form the incumbent mobile industry are very much like the 3G BORG: it is large, square but very well adapted to seek out things it can assimilate to advantage.

That is why 3GPP/3GPP2 has come around to assimilate WiMAX technology and call it LTE.

In doing that, NG becomes WiMAX+LTE. Both in legal & regulatory bounds and in ecosystem and business structure.

WiMAX or LTE? Frankly, you and I do not decide, we observe. And so do does the WBA industry as a whole unless it acts strategically.

Mike, its good to see your thoughts entering into the various discussions.