Parks Associates Blog

Thursday, August 16, 2007

Xohming (Zoaming) All the Way

So here it is. Sprint calls it Xohm. What does it stand for? WiMAX Outside of HoMe? Besides revealing the name for its upcoming WiMAX services, Sprint also announced that it would spend up to $5 billion to roll out the network to 125 million people in the U.S. before the end of 2010. Considering 30 million out of the 125 million pops will be covered by Clearwire, Sprint's WiMAX partner, the average cost per pop is about $53, definitely much cheaper than the $800-900 Verizon is spending on covering a household with FTTH. It's obviously not a fair comparison since we did not include the cost of spectrum and everyone knows a big advantage of broadband wireless networks is it's much cheaper to roll out than a landline network. However, $5 billion for 95 million households is a lot more expensive than earlier estimates from some industry analysts a few years back, claiming a national WiMAX network is possible with a mere $2 billion. BTW, rumor still says all the major ecosystems partners such as Intel, Samsung, Motorola, and even Nokia are chipping in...

Other things we learnt from the announcements include the following:
  • The first $2.5 billion earmarked for the first 70 million pops will be spent before the end of 2008. The next $2.5 billion covering another 25 million pops is contingent upon the success of service.
  • Since the first $2.5 billion is for densely-populated markets, the cost per pop is a lot lower at around $38 a pop, compared to $100 per pop for the next 25 million.
  • Sprint expects $2-2.5 billion in revenue in 2010. Assuming an ARPU of $40 (most likely data ARPU since Sprint wants to keep its cellular network for voice) for a subscriber with a couple of devices connected to the network, Sprint needs to sign up 4.2-5.2 million subscribers before YE 2010.
  • If Clearwire spends the same amount of money per pop for its 30 million pops, they need $1.6 billion between now and the end of 2008.
  • Sprint probably spent some cold hard cash with highly-paid consultant to come up with Xohm, maybe more than they spent on Pivot or Legend spent on Lenovo.

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