WiMAX has Sprint Nextel beating its chest

Sprint CTO cites carrier's first mover advantage

By Jim Duffy, Network World, 03/28/07

ORLANDO -- Sprint Nextel believes its decision to select WiMAX as its fourth generation (4G) wireless technology will put it at least two years ahead of competitors’ mobile broadband networks based on the two other 4G flavors.

Sprint argues that Long Term Evolution (LTE) – apparently favored by the widespread GSM operator community – and Ultra Mobile Broadband (UMB) from the CDMA2000 advocates will take so long to bake that WiMAX will become the de facto 4G standard.

“We are already testing equipment. [It] will be fully stable and deployed to 100 million [points of presence] by the end of next year, and there won’t be a sign of any of these other technologies,” said Barry West, Sprint CTO and president of the carrier’s 4G mobile broadband business unit, at this week’s CTIA Wireless 2007 conference. “So I think first mover advantage here is extremely important.”

Key to Sprint’s motivation is formation of an ecosystem of chipset makers and device manufacturers to embed those chipsets without subsidies from the network operators, as is the case in the cellular world, West says. Low cost WiMAX chipsets mean device manufacturers do not have to be persuaded to embed them into their products through operator subsidies to get them to market.

“The old cellular model of operators subsidizing devices has to go away,” West said. “With [Evolution-Data Only] and [High Speed Packet Access], heavy subsidies are being made to the PC OEMs to actually embed those technologies. Without that low cost chipset structure, it’s very difficult to make the whole ecosystem work. So that’s the fundamental difference.”

Another is Sprint’s influence in driving the market, West says.

“We are the 800-pound gorilla, we are defining where it goes,” West said. “That’s a position we’re used to with our relationship with Motorola and the iDEN technology.”

Motorola made handsets for Nextel’s iDEN push-to-talk network. Sprint acquired Nextel in 2005 for $36 billion, which is when West, the chief architect of the iDEN network, joined Sprint.

Influence aside, LTE and UMB are just taking too long to gestate, West said.

“WiMAX is at least two years ahead of these other technologies,” he said. “WiMAX has been out there for a while with [the IEEE standard] 802.16d, so it has quite a history, whereas LTE and UMB will be a new venture for both development communities. We’re already building a huge ecosystem that will have a jumpstart before anyone else even gets there.

“The GSM community will point to how many GSM networks there are,” West continued. “But you have operators in the world already saying, if LTE is delayed much more then WiMAX will become a de facto standard. And I honestly believe that’s what’s going to happen.”

Despite reports from the financial community that Sprint’s WiMAX rollout is subject to significant delays and cost overruns, West said everything is on schedule. Chicago and Washington, D.C., are on tap for trial service this year, Baltimore next year, and then 100 million Sprint POPs will be WiMAX-ready by the end of 2008, he said. (Read more on Sprint's accelerated WiMAX rollout plan.)

The 12 new markets announced earlier this week bring the current total to 19, or 25% of Sprint’s market, due to have WiMAX service in the first half of 2008, West said.

Similarly, the churn situation going on with Sprint’s iDEN subscriber base is having no negative impact on the carrier’s WiMAX schedule, West said. Sprint lost 306,000 postpaid subscribers – the bulk coming from the iDEN network -- in the fourth quarter of 2006, a rate of 2.3% per month compared with 1.5% for AT&T and less than 1% for Verizon Wireless.

Some of those customers are moving to Sprint’s higher capacity CDMA network via hybrid CDMA/iDEN “PowerSource” handsets and QChat push-to-talk service for CDMA. But others are going to competitors such as Verizon Wireless, AT&T, Alltel and T-Mobile, analysts note.

Sprint plans to cap investment on its iDEN network at the end of this year – the same time it plans to complete its CDMA upgrade to the higher-speed EV-DO Revision A (Rev A). Sprint then plans to overbuild 60% to 65% of the CDMA network with WiMAX, West said.

“When you look at WiMAX…we can generate a bit for about one-tenth the cost of a bit on the CDMA network,” he said. “So you really want to deploy that where the high capacity demands are. Where we don’t have the WiMAX network – for those people that want the ultimate coverage – we’ll have complete interoperability between Rev A and WiMAX. So the services will move seamlessly on the device between them. But 65% of Internet access coming form mobile broadband devices in a WiMAX footprint is a fairly substantial business. So they do co-exist.”

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Who needs wires?
U.S. wireless subscriber and data service revenue for 2006:
Subscribers:• 233 million, up 12% (25 million) from 2005, and 700,000 short of the record for subscriber growth reached in 2005.
Wireless data service revenue:• $15.2 billion, up 77% from 2005 ($8.6 billion). Wireless data revenue now totals roughly 13% of all wireless service revenue.
SOURCE: CTIA