Nokia N810 for Xohm

Nokia's N810 mobile Internet tablet will be one of the first devices available for use on the Xohm WiMAX network Sprint Nextel Corp. is launching commercially in April.

The device has a 4.13-inch touch screen and is among at least 10 devices Xohm expects to have available at launch.

The Xohm N810 also connects using Wi-Fi. Presumably the big attraction of the Xohm network is its ability to function more like a mobile Internet service than a conventional mobile service, so devices should skew towards mobile Web, mobile Internet and other devices that benefit from the "always connected" feature.

The three initial markets are Chicago, Baltimore and Washington, D.C.

Sprint to Spin off Nextel?

The Notable Calls blog reports a "curious" rumor that Sprint Nextel Corp. has hired Morgan Stanley and initiated director Ralph V. Whitworth's plan to spin-off Nextel, with a formal announcement possibly coming in two to four weeks. Some undoubtedly will say this is a mistake.

Others, including me, will argue that if the choice is to ditch Nextel or the Xohm WiMAX network, Nextel has to go. Sprint already has taken the hit and essentially written off the entire value of the Nextel acquisition.

If it spins off Nextel, Sprint reduces the complexity of running two separate networks, with two sets of consumer devices and support operations to support, as it builds yet a third network.

Once upon a time Nextel boasted the highed average revenue per user in the business. That isn't much of an argument these days as the ARPU difference now has narrowed almost to the point of insignificance.

True, Nextel's customer base always was weighted more heavily towards business users, which is valuable, but Sprint's churn problems are disproportionately related to Nextel, these days. In the right hands, with a management unburdened by the other distractions Sprint has, something can be done about Nextel.

But it won't be easy. Nextel is the only carrier running the iDEN air interface, and Motorola is a key handset supplier. The former issue means handset scale isn't going to be there, so device costs won't be easy to manage. And Motorola itself wants to get out of the handset business, but so far seems to be finding few takers.

Potential WiMAX suppliers, on the other hand, are potentially much larger, and Google is among the firms active in supporting Sprint's Xohm initiative. Sprint already has taken the accounting charge related to the Nextel acquisition.

Spinning Nextel off also will simplify the previously-announced plan to finally consolidate headquarters operations in Kansas City, instead of maintaining two separate headquarters operations, one in Reston, Va. and one in Kansas City.

It's only a rumor at this point. But Sprint has to take drastic steps. It cannot incrementally creep back to health.

Sprint Won't Reach Xohm Goal by 2009

No kidding. Sprint originally expected to have 100 million subscribers for its Xohm WiMAX service by the end of 2009. It now says it won't make that goal, and nobody is surprised.

Xohm, slated to deliver mobile broadband services of 2 Mbps to 4Mbps, for $40 to $50 a month, is slated to launch on a more or less full deployment basis in three cities this spring (Baltimore, Chicago, and Washington, D.C.). There's no conceivable way any new service of this sort, selling into a nearly-saturated broadband access market, is going to get that kind of traction so fast.

Xohm: Where's the Beef?

Sprint Nextel says it will launch it Xohm WiMAX service at the end of April. Associated Press also reports that Xohm will not use subsidized handsets, will offer daily, weekly, monthly and longer-term contracts. In an attempt to differentiate itself from simple "access" services, Xohm will feature location-based services tied to advertising and search and portal services created by Google.

But Xohm will have to do more than that. As the first widespread network created expressly for broadband-based services, Xohm will be an early test of the economics of networks anchored on broadband access revenues rather than voice. And that is going to be a challenge in the early going. By definition, Xohm is soft launching service in three markets with established cable modem and Digital Subscriber Line service.

Chicago, Washington D.C and Baltimore, to be specific. Other markets are supposed to be added in April. The point is, if the offering is positioned as a terrestrial broadband substitute, how big is the opportunity? Conversely, if Xohm is positioned as a mobile broadband alternative to existing third generation services, are location services enough of a differentiating factor?

It is conceivable that customers will defect to Xohm for prosaic reasons: no-contract service or lower prices, for example.While helpful, that is hardly an objective requiring construction of an entirely-new network. Many years ago, when new blocks of spectrum were auctioned off for what was then called "personal communication services," the thinking was that the spectrum would be used to create new services, used in new ways. A prime example was a sort of quasi-cordless, quasi-cellular service that offered call handoff when the user moved at pedestrian speeds, but wouldn't be usable at freeway-driving speeds.

What happened is that all that spectrum wound up being used as the basis for CDMA and GSM-based 3G mobile networks instead. New services were created, of course, but not the ones everybody expected. People thought the access mode would be the difference. Instead, it was text messaging and mobile email that wound up driving new service revenues.

It is conceivable that some new use mode will develop for WiMAX networks, based on game platforms or media devices rather than phones, for example. The issue then will be about whether the cost of building and operating the network, and securing the spectrum, can support the revenue generated by the new use cases. It's not going to be easy.
.

Sprint, Clearwire Deal Dead

In a surprise move, Sprint Nextel Corp. and Clearwire Corp. say they are scrapping their agreement to jointly build a nationwide high-speed wireless network based on WiMax technology, after failing to reach agreement on terms of the deal.

The move naturally will increase speculation about the fate of the Xohm WiMAX venture, given Sprint's desperate need to shore up its existing mobile phone business. Obviously, the asset is easier to sell or spin off if Clearwire isn't involved.

Is it not too early to predict that Google strategists now will be taking another look at spectrum options? At the same time, might not once more note that the complexity of running two separate networks, sets of devices and software are part of Sprint's problem?

Other carriers have dealt with such issues by collapsing all services and users onto a single technology platform. Clearly, most of the churn issues are caused by the Nextel base, heavy with small business users. The Nextel iDen network is a-now unusual platform that nobody anywhere else supports, besides.

At one point, the Nextel customer base was prized within the mobile industry for its significantly-higher voice average revenue per user. These days, as revenue growth is coming from new data services, the gap has narrowed almost to insignificance, and surely will vanish.

At one time, Nextel's "push-to-talk" feature was unique, but other providers now are able to mimic that feature. It's popular in the construction business, but when was the last time you saw anybody use that feature who wasn't in a field service work scenario?

Operating two networks leaves Sprint with a troubled customer base, higher churn issues, an unusual technology platform and all the other issues--such as limited handset choice--that come from being a low-volume customer. There's more downside than upside. And be clear, most of the churn is from the Nextel side.

From Google's vantage point, it is clear that the Sprint WiMAX network will be built and operational years before any 700-MHz network will. Sprint's WiMAX network has been designed for mobile access, where Clearwire has been taking the fixed approach. Mobility works better for Android devices, obviously.

Sprint now says it will review its WiMax business plans. It also should be seriously considering what to do with the Nextel assets.

New Direction for Google, Sprint, Clearwire?

The only clear and unambiguous statement one can make about Google's mobile aspirations is that mobile advertising is key to Google's future growth. Everything else is open to discussion. And even as speculation remains about Google's possible interest in owning 700 MHz spectrum or even designing its own mobile devices, new possibilities continue to arise.

Under pressure for failing to protect the business it has got, Sprint executives are likely to consider some alternative future for the WiMAX network it has been touting as its fourth-generation network. Finding some way to monetize and offload the asset are among the obvious options. Merging the WiMAX assets with Clearwire is one option, though doing so without monetizing the restructured asset won't help Sprint very much, if the attempt is to lighten the capital spending and management attention burdens.

Sprint could do so if it spun off the WiMAX network in some way. And that's where Google has yet another option. The problem with owning 700 MHz spectrum is that service can't be provided until the network is built, requiring more cash and more time. Google might not want to wait.

The WiMAX network will be commercially viable long before any 700 MHz network will. So add more more wrinkle to the "what will Google do in mobile" speculation.

At this point it also seems safe enough to assume that some sort of reference design and operating system are under development, even if Google does not itself roll out its own phone. Separately, Google also is maneuvering to get prominent play for its mobile-optimized applications on existing devices and networks. And none of the tactics and strategies are mutually exclusive. Google might do some or parts of all of them.

Xohm: No Contract, No Subsidy, No Termination Fees, No Obligation

Sprint says Xohm WiMAX customers will not have to sign contracts and won't charge any termination of service fees either. Users will buy their own air interface cards without Sprint subsidizing the hardware. The whole message: "You don’t owe me anything, I don’t owe you anything."

Well, not quite. Users might just be offered subscription plans whose cost declines over time as the length of the relationship grows. Nice. Reward a customer for loyalty. Of course, Sprint also knows that customers with long tenure are the most profitable customers it has. So there is more margin to shave to keep those customers happy.

Xohm is expected to operate at aobut 2 Mbps to 4Mbps downstream and 1 Mbpt to 2 Mbps upstream. Pricing probably will be set about about $30 or $35 a month.

It is a small step, but one of many being taken throughout the wireless ecosystem to bring more user freedom.