Parks Associates Blog

Monday, September 29, 2008

Sprinting ahead with WiMAX

Today, Sprint has launched its first official WiMAX network in Baltimore, MD. Initially, the service is rumored to offer 2-4 MBps speeds for about $30 per month plus the cost of USB modem (about $60). Sprint offers the service without contract and even offers flexible 1-day passes for $10, to try-before-you-buy experience.

If Sprint can successfully pull off the WiMAX launch in Baltimore, it would put the feather in its cap and help to silence the skeptics. What’s even more important, it will keep it from loosing the valuable 2.5GHz spectrum. Perhaps this is why the target city for the first major rollout is Baltimore, Washington DC’s (and FCC’s) back yard.

Baltimore has several other advantages as the launch city, positioning Sprint’s Xohm for success:
Great scenario to build out a mobility play. A major argument against WiMAX is that it is a poor mobility solution. With WiMAX deployed in Baltimore, mere 40 miles away from Washington DC, deploying WiMAX in DC by the end of the year (as scheduled) would create a sandbox for Sprint to experiment with mobile WiMAX while lighting up another major metro market.

Good balance of deployment cost and business mix. The cost of deployment in Baltimore would be lower than in many other major urban centers, such as Boston, New York or Philadelphia. Meanwhile, Baltimore has sufficient number of businesses and universities to provide Sprint with vital first customer wins.

Baltimore is not a focus point for the 3G guys. Mobile broadband was born as a business service, so US major business center, such as New York, Boston and Philadelphia are well covered by 3G networks and have very high penetration of 3G services. They represent the bastions of entrenched 3G customers, vs. Baltimore, which poses a softer target, especially at the $30 price point.

Despite these advantages, Sprint’s team has a long, uphill battle ahead. The company has a cash reserve for about 12-18 months. The 3G carriers use their successful voice cash cows to fund buildouts of their 3G networks. Sprint doesn’t have that luxury. The company is cash-flow negative. It is rapidly burning through the cash it raised from its partners: Comcast, TWC, Brighthous, Intel and Google.

In addition to financial difficulties, at least for the moment, Sprint is at the technological disadvantage. The 3G carriers have older, 2/2.5G networks built out and most of their devices are backwards compatible. Thus when iPhone looses the 3G signal, it can continue using a slower, but reliable EDGE signal and stay connected. Sprint’s WiMAX doesn’t have that luxury. Unless a CE manufacturer embeds both a WiMAX chip and a cellular broadband chip into a device, once the customer is out of the WiMAX range, s/he is disconnected. Although in future CE devices, this flaw will likely be resolved by allowing consumer to fall back to 3G services when out of WiMAX range.

Labels: , , , ,

0 Comments:

Post a Comment

Links to this post:

Create a Link

<< Home