Thinking Differently from 2G and 3G

By Rodger Howell and Philipp Muelbert, PRTM Management Consultants

WiMAX presents the first opportunity to extend a full-featured Internet experience at broadband speeds to the mobile economy. WiMAX delivers benefits--lower cost per megabyte; standards-based network design; and low-cost, small-scale chip sets--that promise a ubiquitous mobile broadband experience on a myriad of portable electronic devices. Capitalizing on this technology requires a radical rethinking of the existing mobile business model.

Previous wireless generations were focused primarily on ubiquitous voice coverage. 3G was supposed to be the generation in which data services became as widely used as voice. However, expensive spectrum acquisitions, which contributed to the delay of the build out of new networks and services, combined with limited availability of data-centric devices, has kept data revenues below expectations. Only now are operators deriving more than a quarter of their revenues from data services, due to the increased availability and penetration of 3G devices. However, the majority of these sales are still related to messaging services.

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.