Ever since Sprint transferred its WiMAX spectrum to Clearwire in return for 51 percent of the company and agreed to resell WiMAX services back from Clearwire, Sprint has revealed little about its 4G strategy.
I spoke with Todd Rowley, vice president of Sprint's 4G business unit, about the company's plans for WiMAX. Interestingly, it was Barry West, former president of Sprint's Xohm business unit and now president of the new Clearwire, that was the tireless advocate for WiMAX and its corresponding business model. Sprint was going to turn the industry on its head, offering WiMAX services that come with no subsidies with WiMAX chips embedded in a plethora of consumer electronics devices.
Now Sprint has moved back to the old 3G business model complete with laptop cards and a WiMAX/CDMA device in 2010. The operator doesn't see itself beginning to move to this open devices and home modem vision until Clearwire establishes a substantial footprint sometime in 2010.
"Intel has announced and shown significant progress in laptops with 27 skews," Rowley said. "Module and chipset costs are already significantly below where GSM and CDMA module pricing is. The pricing is following the curve in a way we were expecting... Once you're down into the netbook and UMPC level, now you have the ability to put a chip in a digital camera." That's when consumer electronics manufacturers need to determine whether there is enough of a nationwide footprint to sell WiMAX-enabled devices and whether they can funnel their products into places where there is a WiMAX footprint, Rowley said.
Well, 3G operators have their eye on embedding chips in consumer electronics devices too. AT&T Mobility recently created a dedicated position for it, while Verizon Wireless is also working on it. Clearwire is going after the same thing while its cable partners may attack the access market. So what will make Sprint's 4G service so special?
Rowley said Sprint will use its already strong position in the business market to push 4G. The business market won't be one that Clearwire will attack much, and it is looking for Sprint to be the primary channel, Rowley said. "That will be very much a focus for us," Sprint said.
Moreover, WiMAX will allow the company to complement its existing services, appealing to its existing base of customers by allowing them to cut the cord with home replacement services. "It allows us to grow some of the paths we are already focusing on such as family value plans and cutting-the-cord opportunities. There will be new opportunities for us to extend product set."
Right now, Sprint is offering a dual-mode data card in Baltimore branded Sprint 4G. The service costs $20 more than its 3G data service. And perhaps Sprint is looking to offer a home run by offering an iconic smartphone device running on 4G. Rowley said to look for such an "iconic" device in 2010. Ever since AT&T introduced the iPhone, operators have been scrambling as AT&T enjoys significant net adds and data revenue.
"We do believe the capabilities and services available in 4G positions us well to have an iconic-type device," Rowley said.
While Sprint's 4G strategy in itself isn't risky since it is built on existing 3G business models, the company's success in 4G is obviously tied to Clearwire's success. And there is some question as to how well it will execute a new wireless broadband business model and how quickly it it rolls out its markets. (See my list of Clearwire pros and cons.)
To that, Rowley assures that Clearwire is aggressivley moving and is putting its money where its mouth is. "Sprint is strategically very committed and operationally very committed. We're going to be a very strong partner." --Lynnette