End of Sprint-Clearwire deal means dirty work remains

Publisher's Note:  

If you're someone based in Europe or who follows the European wireless market, I have some good news: Today we launched a new, Europe-focused edition of FierceWireless. The new publication, called FierceWireless:Europe, will cover the European wireless industry on a twice-weekly basis. Sign up is available at www.fiercewireless.com/europe/signup. FierceWireless:Europe will be written and edited by our new U.K.-based correspondent, Paul Rasmussen. Paul has been writing about mobile communications for more than 12 years, and we are thrilled to add him to our team. You may see his coverage in this publication from time to time. We at FierceMarkets are particularly excited about FierceWireless:Europe. It's our first-ever international edition, and we have high hopes and expectations.  -Jeff

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Everything for the stakeholders in the mobile WiMAX market appeared to be buzzing along at least primarily in the right direction until Friday, when Sprint Nextel and Clearwire called off their plans to share the costs to build a joint WiMAX network that would have reached 100 million people by year-end 2008.

Sprint was going to focus its efforts primarily on geographic areas covering approximately 185 million people, including 75 percent of the people located in the 50 largest markets, while Clearwire was to focus on areas covering about 115 million people. That rapid buildout promised to push down the economies of scale for network equipment and spur consumer electronics companies to embed WiMAX in a plethora of devices. Many vendors have jumped into the WiMAX market since that deal was announced in July, looking to capitalize on the rapid deployment of mobile WiMAX.

Instead, Pali Research says the termination of the Sprint deal will result in fewer WiMAX networks being built in 2008 and will likely slow down Clearwire's transition to building WiMAX networks. "As a result this is clearly a negative development for the roll-out of WiMAX in the United States and the vendors selling that equipment," analyst Walter Piecyk wrote.

Sprint hasn't given much assurance either. Even though it has restated its plans to soft launch its Xohm WiMAX service later this year in Chicago, Baltimore and Washington with a commercial launch in 2008, we still don't know how aggressive the operator will be in 2008. The company says it is re-evaluating the business.

What does this mean for the mobile WiMAX community? It's tough to say. Sprint and Clearwire together were largely responsible for driving interest in the technology, spurring operators in other countries to launch networks and vendors to jump into the market. Is the momentum elsewhere enough to drive the volume of mobile WiMAX to the extent that a Sprint/Clearwire combination would have? I'm sure there will be more than a few vendors scaling down their WiMAX projections and plans for 2008, but it also appears a number of vendors are poised to transfer technology trials into commercial contracts in 2008. Governments are ramping up spectrum auctions, and the International Telecommunication Union embraced mobile WiMAX as a 3G standard. But scale likely won't happen as fast now.

Mobile WiMAX really needs that one big operator committed to a nationwide rollout. Certainly companies like Intel and Motorola--both of which have a vested interest in seeing mobile WiMAX succeed in a big way--will be ready to whip out their checkbooks to inject momentum back into the market. Maybe a white knight like Google could sweep in. One thing is for sure, the dirty work of trying to build a massive footprint somewhere for mobile WiMAX still isn't done.-Lynnette