News Stay informed about the latest enterprise technology news and product updates.

With Clearwire cash running low, Sprint's WiMax push no sure thing

Early on, Clearwire, Sprint's WiMax 4G network, was a media darling, but the company's future has become clouded as billions invested by Google and Intel are being written off.

Early on, Clearwire, and by extension Sprint's WiMax 4G wireless network, was the darling of the technology press,...

but the company's future has become somewhat clouded as billions of dollars invested by the likes of Google, Intel and major cable companies are being written off, with soaring expenses and slower-than-expected deployments.

Intel, for example, recently wrote down a nearly $950 million loss on its own investment in the 4G wireless company; Google saw a $355 million writedown on its investment.

More in Sprint's WiMax ambitions
For Sprint, lessons learned could mean brighter WiMax future

As WiMax stumbles, LTE set to be mobile enterprise 4G "standard"

While LTE and WiMax hype builds, era of 3G still just beginning

WiMax on the way: FCC approves Sprint-Clearwire merger

As Sprint bets big on WiMax over LTE, timing may be everything

Sprint 4G WiMax network could build on Palm Pre launch success

And while Intel, which has invested heavily in chip research that would go to support a WiMax ecosystem, and Google, which has pushed for more open wireless Internet access, cannot be pleased with the downturn in Clearwire's fortunes, Sprint has the most to lose.

"There's some deep pockets out there with Intel and others," said Jack Gold, president and founder of research and analysis firm J.Gold Associates. "Sprint, not so much anymore."

The struggling wireless giant, which is a 51% owner of Clearwire, has continued to hemorrhage customers despite improvements in customer service and success with the budget-friendly Boost Mobile division. Without a successful Clearwire, and the infratructure to support a 4G network service offering, Sprint may not have a serious wireless future, according to Gold.

"From the U.S. perspective, I think that if they don't get WiMax substantially deployed within the next 12 to 18 months, it'll be too late," he said. "It will be a minor play."

Others are a bit more bullish on the future of Sprint and WiMax, while acknowledging numerous challenges.

"I think it's unlikely that anything major will happen in the near term because Sprint has weathered the worst of the economic changes, and the recovery is in progress," said Tom Nolle, president of CIMI Corp.

And as far as WiMax goes, Nolle acknowledged that Intel's hopes for an easy ecosystem advantage have been tarnished, but he said that the cable companies, including Time Warner Cable and Comcast, have a sizable interest in WiMax's success.

These companies are planning to use WiMax as a pincer move to rout DSL competition, Nolle said. The introduction of DOCSIS 3 for traditional cable pushes the speeds well out of the range of DSL, while WiMax will serve as a lower-cost competitor for customers who do not require high-speed access.

"The people who will really make Clearwire work will be people like Comcast," he said.

Indeed, Comcast has already detailed information about its WiMax services in Portland, although currently it's marketing WiMax as a supplement, not a low-cost replacement, to its cable offerings.

WiMax rollout slower than hoped

Overall, though, Clearwire's 4G push has seen more fits and starts than backers had hoped.

Chicago, one of the first cities to go live with WiMax during early trials, had its commercial launch date pushed from early 2008 to late 2009 as far as Sprint-branded services, and the company has only covered a tiny fraction of the 80 markets it had hoped to cover by mid-2010.

Some of the challenges have been technical: Outfitting complete WiMax coverage in Chicago, for example, requires an enormous amount of infrastructure upgrade.

But funding has also been a challenge: Earlier this year, Clearwire announced it would need $2 billion in additional investments in order to move forward.

"It's clear that capital markets are closed for either borrowers or companies that are trying to raise capital, regardless of what kind of company it is," Clearwire CEO Ben Wolff told Bloomberg at the time. "We've seen challenges across the board."

For its part, Clearwire is doing everything it can to make deadline now.

Already, the company's 4G service is available in four U.S. cities -- Portland, Atlanta, Baltimore and Las Vegas -- and it recently reiterated plans to enter 25 markets by the end of the year.

But how much more the non-Sprint backers are willing to invest is a serious question, as those companies face tough financial times of their own.

"No one has an unlimited checkbook these days, not even Intel," Gold said. "Everyone really underestimated the level of investment that would be needed to make this go. If it moves too slow, that's a real problem because technology passes you by."

In this case, the technology is LTE, which stands for Long Term Evolution, the technology standard backed by Verizon and AT&T for their 4G networks. Verizon has aggressively been playing catch-up with Clearwire, and with broader U.S. adoption, LTE's main drawback as compared with WiMax was the quickly narrowing time-to-market difference.

Gold said that Sprint had failed to capitalize on that advantage by not marketing WiMax effectively enough, particularly as it relates to the array of 3G and other wireless data options already available on the U.S. market.

"There isn't a whole lot of market pull," he said. "You want people to be clamoring for your products, and I don't think that's happening right now."

Nolle agreed that WiMax's strongest pull was not found with Sprint itself, but he said that the situation was not necessarily as dire as it seemed.

"The proof that it can be valuable in the near turn almost has to come from the cable companies, because that's the simplest path to success," he said.

Right now, consumers have still reined in spending, meaning that a commercial return on mobile high-speed services might still exist but simply be delayed overall.

In the end, though, the WiMax rollout may be just one more hurdle for the company (and CEO Dan Hesse) to leap over for a viable future. Gold said that even before the jury is in on WiMax, Sprint must see some serious successes.

"They don't have two years [to turn the company around], in my opinion," Gold said. "If WiMax is a failure, they're in big trouble, but ... they may be done for before WiMax goes bust."

Thoughts on this story? Suggestions for story ideas? Contact article author Michael Morisy via e-mail or follow him on Twitter.

Dig Deeper on Telecom Resources

PRO+

Content

Find more PRO+ content and other member only offers, here.

Start the conversation

Send me notifications when other members comment.

By submitting you agree to receive email from TechTarget and its partners. If you reside outside of the United States, you consent to having your personal data transferred to and processed in the United States. Privacy

Please create a username to comment.

-ADS BY GOOGLE

SearchNetworking

SearchDataCenter

SearchCloudComputing

SearchCloudProvider

Close