WiMAX dealt another blow

 

WiMAX dealt another blow 

The WiMAX ecosystem was dealt another blow today with the news that Sprint and Clearwire are terminating their plans to share the costs and build a joint WiMAX network that would reach 100 million people by year-end 2008.

The companies said that the reason for ending the proposed deal was that they were unable to resolve complexities and reach a final agreement. Even though Sprint has reaffirmed its plans to soft launch its Xohm WiMAX service later this year in Chicago, Baltimore and Washington with a commercial launch in 2008, the news has caused many to wonder whether WiMAX will ever be more than a niche play. In a research note, Walter Piecyk of Pali Research said that his firm believes 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 from its current construction of Expedience 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," Piecyk wrote.

I guess I'm not surprised that Clearwire and Sprint found out that leveraging each other's WiMAX networks wasn't as easy as they initially thought. I moderated a Webinar in late August called "Building a Nationwide WiMAX Network: The Real Impact of the Sprint-Clearwire Deal" where I had several experts talk about the proposed venture. During the Webinar, Peter Jarich, principal analyst with Current Analysis, noted that this was a risky move for both companies and he predicted that the two firms would have challenges when they tried to coordinate the back office. He also pointed out that Sprint was taking a risk in joining forces with Clearwire, which has suffered extensive financial losses as it builds out its network. Today, Clearwire reported that it had added 49,000 new subscribers in third quarter 2007, which was lower than some analysts expected. Pali Research expected the firm to add 55,000 customers, which was already a revised estimate from the original 65,000.

In its press release Sprint noted that it was still open to pursuing a roaming relationship with Clearwire, and it hopes to still work on spectrum interference coordination and arrange spectrum exchanges with the company. I certainly hope that's true because Sprint will likely need to pursue those options as it rolls out its network and seeks to provide its customers with nationwide WiMAX coverage.

Clearly rolling out a new technology isn't an easy task. I hope Sprint can prevail with its Xohm network and prove the naysayers wrong. The industry will certainly be watching carefully in the next few months to see when, and if, Sprint can deliver on its promises. -Sue

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