Some members of the editorial staff at FierceMarkets and I had the opportunity to speak with Barry West, president of a newly formed 4G mobile broadband business unit at Sprint Nextel, about the company's plans to deploy WiMAX technology in the 2.5 GHz band. Here are some interesting excerpts from the conversation:
- Sprint's biggest advantage is spectrum, West said. The operator will be able to deliver services at one-tenth of the cost of current cost structures primarily because of its vast spectrum holdings in the 2.5 GHz band. Wider the channel, the more bits you can drive through less equipment. That will allow Sprint to compete in the DSL and cable world with $30 per month rate plans. Remember Nextel's trials of Flash-OFDM in Raleigh, NC? The operator offered high-speed wireless services for $30 a month. Despite knowing that the service was a six-month trial, consumers were annoyed when it ended.
- Will Sprint stay with WiMAX? West said Sprint chose WiMAX over the 3G Long Term Evolution (LTE) standard, the evolution beyond WCDMA/HSDPA that incorporates OFDM, because WiMAX will get the company to market two years faster. But the company always has the opportunity to migrate to LTE if the economics work out better than WiMAX in 2015 or so. However, West doesn't believe it will end up that way. What about EV-DO Rev. C? That wasn't really a candidate in the 2.5 GHz band. "It's not clear why we'd do Rev. C," he said. He'd like to see a defacto 4G standard that combines mobile WiMAX, LTE and Rev. C since all will be based on OFDMA anyway. Of course, manufacturers and those who are rapidly filing OFDMA patents wouldn't like to see that.
- Since WiMAX will be about embedding chips in consumer electronics devices like personal media players, Gameboys, TV sets and printers, Sprint won't be subsidizing devices so the silicon has to be cheap, said West. I say it will be an incredible feat to see cheap silicon in such a nascent market.
- Part of the problem with bringing in consumer electronics players is the chicken and egg phenomenon. Consumer electronics companies won't include WiMAX unless they get a big commitment from an operator, said West. That's why Sprint has committed to building a substantial footprint with coverage of 100 million pops by the end of 2008. "We believe we can build our markets on a demand-driven model," he said. High density areas will support mobile WiMAX-only products and EV-DO/WiMAX products will support a wider footprint.
- Sprint picked tier one vendors Motorola, Intel and Samsung because there's still a lot of work to be done to mature mobile WiMAX technology. "We are going to collocate with Samsung and Motorola with my 4G business unit," said West. "We're putting the new business unit physically away from the mother ship yet leverage resources of the parent company for the network build out and IT."
- And finally, the investment community has noted the high risk associated with Sprint's WiMAX plans and the uncertainty of the return on investment. What does West say to that? "We built the business plan around the revenue opportunity, and we were extremely conservative. It is still a very strong no-brainer position. Assume the whole world doesn't go down this broadband path. We still have a network at one-tenth the cost. So even just applying the same services, I've just built margin expansion into existing services and could justify it on that basis only." -Lynnette
ALSO: Explain to FierceGameBiz editor Nathan Eddy why the PS3 is or isn't worth $600 dollars and you could win a PS3 or two Nintendo Wiis. C'mon, how long does it take to write 100 words? Site -Brian