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August 12, 2008: WiMAX spending drops

Brian Dolan, Editor
Brian Dolan
Editor

Key WiMAX vendors including Alvarion, Airspan and NextWave posted quarterly results recently as did WiMAX bellweathers Sprint Nextel and Clearwire: The general takeaway is that WiMAX spending is down and the economic downturn alone may not explain the decrease. 

NextWave: "We are feeling the effects of a slowing global economy on our business. This has resulted in lower than anticipated sales of our 3GPP and WiFi-based network products and a delay in WiMAX network deployments that will continue to impact projected sales of our WiMAX semiconductor products," CEO Allen Salmasi stated in a release.

Alvarion, however, is humming a different tune: "Current customers are expanding their networks, bookings are strong, and the pipeline of potential new business is large and growing. This further increases our confidence in our ability to achieve the upper end of our target revenue range of $275 to $300 million for 2008," CEO and President Tzvika Friedman stated.

For its part, Airspan, reported a Q2 3 percent decrease in revenues to $21.4 million.

In the meantime, Clearwire is bearing the brunt of merger expenses: The service provider reported a net loss of $199.1 million, compared with a net loss of $118.1 million this time last year. The results included $27.9 million in impairment losses on investments and expenses of $10.2 million related to the JV process.

Our columnist Caroline Gabriel cautions the industry against relying on the new Clearwire as the proving ground for WiMAX and points to various other successful deployments. FierceBroadbandWireless wonders if the recent round of financial results is the beginning of a shakeout in the industry between winners and losers.

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In some ways, Sprint Nextel's early embrace of Mobile WiMAX has done the 802.16 cause harm as well as good. It has subverted the marketing agenda almost entirely towards wide area mobile broadband and established carriers, taking the spotlight off the markets where the prospects for WiMAX are far more assured - fixed and nomadic or metrozone broadband, largely for underserved areas or to complement fixed models. This mismatch has only been emphasized in the past few weeks, with the success stories coming from traditional deployments and vendors, like Alvarion, and further doubts hanging over the ambitious Sprint/Clearwire joint venture plan.

So as the industry continues to set too much store by the ups and downs of Sprint and Clearwire - and associate them intimately with the rise and fall of WiMAX as a whole - both partners have reported a disappointing quarter, with Clearwire's widening losses particularly in the spotlight. However, Clearwire insisted that the formation of the joint venture to create 'the new Clearwire' with Sprint Xohm is on track, a statement that boosted its shares by 2.5% to $9.21 last Wednesday.

 

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AT&T may be trying to block the merger of Sprint Nextel's and Clearwire's WiMAX activities, but it is also proceeding with its own, more limited, plans for the technology. The telco has been trialling WiMAX-class technologies in rural areas for a few years and now its CTO John Donovan says the system is "at the top of the list" as an alternative to copper.

Donovan said, in an interview with newspaper USA Today that the cost of copper roll-out was making it prohibitively expensive to build DSL for rural communities. This is the usual dilemma that has left the US' rural reaches sadly underserved by broadband and 3G - high cost of deployment, coupled with sparse and often low income populations, and falling broadband tariffs. This ROI-challenging combination could be addressed by broadband wireless, and specifically the standards-based economics of WiMAX, believes Donovan, echoing the view of WiMAX that has driven most of the world's actual deployments, away from the headlines about mobile broadband and 4G - that it is a natural leader for wireless DSL and fixed/nomadic access for underserved areas, and this market will be far easier to dominate than mobile applications.

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Latest Industry News
August 12, 2008
Australian WiMAX launch delayed, again
http://www.telegeography.com/cu/article.php?article_id=24533&email=html
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Olympic WiMAX likely to disappoint
http://www.vnunet.com/vnunet/news/2223640/olympic-wimax-likely-disappoint
August 12, 2008
WiMAX Forum applauds India's spectrum moves
http://www.wimaxday.net/site/2008/08/08/wimax-forum-applauds-spectrum-auction-in-india/
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The real story behind WiMAX spending
http://www.fiercebroadbandwireless.com/story/wimax/2008-08-10
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NextWave's cash is running out
http://www.fiercebroadbandwireless.com/story/nextwaves-cash-running-out/2008-08-10
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MetroPCS picks LTE
http://fiercebroadbandwireless.com/story/metropcs-picks-lte-4g/2008-08-11
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Sprint's WiMAX spend drops
http://telephonyonline.com/wimax/news/sprint-second-quarter-loss-0806/
August 12, 2008
Clearwire preps for WiMAX launch
http://telephonyonline.com/wimax/news/clearwire-sprint-wimax-merger-0808/
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