Sprint and Clearwire Might Go LTE for 4G

Sprint Nextel and Clearwire executives have said for some time that WiMAX and Long Term Evolution are similar enough that Clearwire could switch to LTE at some point. But that is more likely to happen when another technology migration to "fifth-generation" technology happens, not in the fourth generation.

In one respect, battles over air interface are simply part of the mobility business. Just as AT&T and T-Mobile opted for the GSM air interface while Sprint and Verizon opted for the rival CDMA air interface, and similar battles were fought over 2G standards, carriers will have to migrate their platforms over time, just as they always have.

The evolution from GSM (3G) to LTE (4G) will still require a new network, with a new air interface, operating on discrete spectrum and requiring new handsets and software. For that reason, each technology generation requires a fork lift upgrade and a refresh of consumer terminals as well. That's just part of the business.

So though Clearwire and Sprint chose WiMAX for 4G, their options for 5G remain open, and both Dan Hesse, Sprint CEO, and Bill Morrow, Clearwire CEO, say they could opt for an LTE derivative for 5G.

Hesse says the choice of WiMAX was based on the fact that Sprint could not wait for LTE standards to jell. It had a business need to move, so it did. "WiMax was tried-and-true tested technology at the time we made the choice," he says. "We couldn't wait."

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WiMAX: Ultimate Role Unclear

Clearwire touts its vision of the future as mobile Internet. But so far, its customer base is a replacement for dial-up, cable modem or Digital Subscriber Line service. Just four percent of its customers appear to substituting a mobile service for WiMAX.

That isn't to say the customer base and apparent value proposition will remain as it currently is. WiMAX someday may compete more directly for the broadband-equipped mobile customer base.

That isn't the case today, where Clearwire seems to be competing with cable and telco fixed broadband services. At some point, the mobility play is supposed to have Clearwire and WiMAX competing more robustly for the data card and smart mobile phone customer. But lots of challenges remain.

WiMAX might someday primarily be a platform for mobile broadband. In Sprint's case, it might primarily be the next-generation replacement for 3G broadband. If the former winds up being the case, cost control will be more important. If the latter, feature richness will be more important.

The reason cost control is more important for a mobile broadband network is that the revenue sources will be less robust, on a "dollar for bit" basis, compared to networks that make lots of revenue from voice and texting services, which are highly efficient, on a "revenue for bit" basis.

Advertising also is more important if mobile broadband winds up being the primary attraction for WiMAX users. That suggests content access is more important than communications, and that in turn means media, and media always means advertising.

4G: It Isn't Really a Technology Issue

As service providers start placing their bets on WiMAX or High Speed Downlink Packet Access (HSDPA) technologies, it is easy to fall into the trap of "technological determinism," the notion that the technology determines adoption or commercial success. Nothing could be further from the truth.

Commercial decisions, not the technology, will be the decisive factor. Business decisions almost always are. One can make a technology either way for WiMAX or HSDPA. But that won't be key. Operational issues, backwards compatibility, installed base, manufacturing volumes and even voice compatibility will turn out to be hugely important.

Some might argue that building a new broadband mobile network with a view to voice performance is nuts. The countervailing argument is that no matter what other "data things" users frequently do, talking will be one of them. And poor voice performance is objectionable in a way that OS instability and Web page unavailability are not. People routinely tolerate lower quality of service for their Web browsers, Internet connections and PC operating systems than they will their voice or video services.

Don't believe that? Watch what happens when movie download services become more prevalent. Every degradation of isochronous service disturbs users more than any non-real-time service. Users are unforgiving of voice or video service hiccups that would not faze them when the hiccups affect a non-real-time data service.

In fact, that's the point: user experience is not degraded by packet loss or some amount of jitter or latency when the application is not real time. User experience is visually or aurally affected in a highly visible way when the application requires predictable, sequenced delivery of the packets. Voice and video, to be specific.

Google and Sprint

We might know by the end of the day what the relationships are, but Sprint Nextel's fate hangs on just a couple things right now. It has to fix its customer service problems and has hired 4,500 people to get that done. Assuming that stops being a problem, it has to decide what to do about protecting its base business while dealing with its WiMAX network. Right now Sprint runs two separate physical networks and WiMAX makes three. Then there are the logical networks for voice and data. Plus back office systems that are in the process of unification, but not all there yet.

More immediately, if it can get a deal with Google, and push the device really hard, it has a chance to stop the excessive customer churn that prevents it from dealing with the WiMAX issue effectively. Google devices might help Sprint with churn, giving Sprint time to repair its customer service reputation and plot a reasonable future for WiMAX.

Most of the churn seems to come from the Nextel side of the house in any case. Is it so crazy to consider divesting Nextel and proceeding with WiMAX?

WiMAX Future? 3G! Sort of

Although WiMax and third generation cellular have been positioned as rival and alternative wireless standards, that might change in some cases as the International Telecommunication Union has decided to include WiMAX in the IMT-2000 set of standards. WiMAX is to be considered, after all, as just another 3G solution such as W-CDMA, CDMA-2000 and TD-SCDMA, all of which are part of the IMT-2000 set of standards.

The decision to approve the WiMAX Forum's version of IEEE Standard 802.16 as an IMT-2000 standard boosts WiMAX chances for wider deployment, especially within the 2.5-2.69 GHz frequency bands. How much of a boost is hard to predict.

WiMAX still will compete with the HSPA "Super 3G" or "long term evolution" (LTE) path most cellular operators have been saying they will take, in large part to preserve the value of expensive infrastructure they already have in place. WiMAX represents a sharp departure from that strategy.

Therein lies the challenge. Few 3G providers will want to risk being marginalized if the great bulk of 3G providers opt to stay on course. Roaming issues, handset cost, availability and price are the price to pay for bolting from the generally accepted path.

On the other hand, an upstart might choose WiMAX in order to differentiate itself from the pack, despite those issues. It's risky, but a challenger might be willing to take some risk, in a bid to grab a seat at the table. After nearly bankrupting themselves chasing 3G spectrum rights, most European mobile carriers will understandably be cautious about risking too much again.

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.

iPhone Wins with Software Defined Radio

Software defined radios--software that emulates all the functions of one or more radio transceivers--have been talked about for at least a decade, and at least one company--Vanu--has had its SDR approved for U.S. use by the Federal Communications Commission. The attractions are many: mobile communications becomes an application any device can be given; dedicated firmware and hardware are unnecessary; multiple radios can be made available to any single device; smaller radios are possible.

An SDR could mean a global mobile device, able to work in Japan, on GSM or CDMA networks, with Wi-Fi or other wireless networks. Some users would love it. Mobile carriers have to be ambivalent. Sure, you'd like to sell a true "global phone." But then you also lose control of the end user and the device. Any truly global phone necessarily works with any mobile provider's network, as well as with Wi-Fi and potentially other wireless platforms--such as WiMAX--as well.

On the other hand, looking at this from a consumer device manufacturer's point of view, SDR is a wonderful thing. If you sell mass market communicating devices all over the world, and have to deal with disparate radio infrastructures and protocols, you want SDR because it streamlines the entire manufacturing and logistics process.

You build one device, supporting multiple radio types; not multiple devices designed to work on one sort of radio platform. If you are Apple, in other words, SDR is a really nice thing. It's a nice thing if you are Nokia as well. Nokia just has more entangling relationships with customers that undoubtedly will press Nokia not to make SDR available.

Also, no particular business model inevitably is bound up with the use of SDR, though obviously the technology lends itself to more open and flexible end user models. One can envision open, unlocked business rules on one hand and walled garden rules on the other where "roaming" is possible anywhere in the world so long as the user has agreed to pay for that privilege.

The point is that by fits and starts, we see more openness at both the device and application layers of any communications-enabled business, corresponding to the openness IP itself has brought to transmission.

What does WiMAX Displace?

To the extent that mobile phone penetration is nearing saturation, while broadband access to businesses and homes also is close to saturaturated, at least as a technology supporting personal computers, one has to ask what customer demand WiMAX will cannibalize. Well, I suppose some people might argue WiMAX creates a new market, but the issue still is to envision what that new market is.

So far, it appears most observers other than Intel Corp. think WiMAX will supplant some other form of access.

Intel clearly sees WiMAX as a technology that changes demand for lap-top PCs. As Internet access has changed requirements for desktop machines, so Intel believes WiMAX will create new demand for mobile machines that are always connected.

But most service providers seem to view WiMAX as a technology that extends or replaces some other existing end user value or network. Sprint sees WiMAX as a technology that changes the mobile phone market by extending beyond third generation platforms, first augmenting and then replacing earlier generations of technology.

T-Mobile might view WiMAX as a technology that potentially displaces Wi-Fi hotspots. Cable and telephone companies see it as a threat to cable modem, fiber-to-home and Digital Subscriber Line services.

I wouldn't be so sure WiMAX ultimately will have most impact as a PC-affecting technology.

It seems to me more likely it will have much more significance as a mobile phone and mobile handheld device platform. There are all sorts of reasons why users aren't going to take advantage of mobile WiMAX from their PCs, including ambient light and furniture. Everybody can reach for and use a mobile in a pocket or purse.

Will Verizon Wireless go WiMAX?

Will Verizon Wireless someday adopt WiMAX as its fourth generation access platform? And if it does, will WiMAX swiftly become just one more access technology wireless incumbents use to reach customers? If so, will WiMAX really be disruptive?

So here's the logic. Vodafone has at least for the moment chosen to keep its 45 percent stake in Verizon Wireless. And though it hasn't been a WiMAX backer heretofore, Vodafone has become a principal member of the WiMax Forum, and has been conducting trials in Malta, France and Bahrain for some time now.

This might just be a hedge, as Vodafone also supports the cellular-based standard for very high speed data networks LTE (Long Term Evolution), as well as WiFi Mesh. But it's a fast-moving world, and Vodafone at the very least wants to react swiftly in case WiMAX takes off as a primary tier one provider access platform.

In the U.S. market, two code division multiple access (CDMA) networks are Sprint and Verizon Wireless. The Sprint Clearwire alliance ups the ante. And Vodafone obviously knows things we do not. But there is some chance WiMAX becomes a major incumbent access platform. And that would clearly blunt its use as a competitive and alternate pipe.

Still, it is fair to argue that WiMAX, even in the hands of incumbents, will spur some "goodness". Sprint WiMax will launch first in Chicago and Washington, D.C. in early 2008, offering 2 Mbps to 4 Mbps service for an estimated $55, company executives have suggested. That would blow the doors off at&t or Verizon 3G offerings, I have to tell you.

Sprint also will be mulling a more open approach to use of that bandwidth than we have been accustomed to seeing on wireless networks. So maybe more competitive and open goodness will flow from WiMAX, even if it winds up being a major incumbent access platform.

Sprint, Clearwire to Create One National Network

Sprint Nextel and Clearwire say they will combine their efforts and spectrum to create a national mobile WiMAX network covering the entire United States. Sprint Nextel's network would cover 185 million people while Clearwire's would cover 115 million.

Services would be sold under a common brand. The two firms have set a target of 100 million potential customers initually, by the end of 2008. There is no word on what becomes of Clearwire's VoIP deal with BCE. As part of the deal, Clearwire will have the ability to offer Sprint Nextel’s third generation voice and data services as part of a bundle or on a stand-alone basis to Clearwire’s customers, which will also allow Clearwire to provide dual-mode services to its customers.

Sprint Nextel will take the lead in establishing relationships with national distributors and other potential strategic partners, including wholesale or mobile virtual network operator (MVNO) arrangements. The initial term of the arrangement is 20 years, with three 10-year renewal periods.

Nobody has excess capital to throw into a new national broadband access network, it certainly appears.