Hold the Obit: Sprint pays $105M for spectrum, will focus on WiMAX

Sprint will buy 10 MHz of spectrum from Wirefree Partners III for $105 million to boost its coverage in 16 markets, the carrier noted in a newly filed quarterly report. Wirefree Partners was formed by former executives of Sprint affiliate AirGate PCS, which was acquired by Alamosa Holdings, which Sprint then purchased. In 2005, during the Federal Communications Commission's broadband PCS Auction 58, Wirefree paid around $150 million for 16 licenses covering a little over 18 million points of presence (POPs). Besides Sprint, Verizon Wireless and Leap Wireless were the other major bidders in Auction 58.

Note that Sprint re-sells Clearwire's WiMAX network and owns over 51% of that company.  Currently Sprint/Clearwire's WiMAX network is operational in 43 markets with more markets to be ope by the end of 2010. The HTC EVO 4G is the first 3G/WiMAX smart phone sold by Sprint.  The carrier also plans to introduce a second 3G/4G smart phone – the Samsung Epic– by August 31st. Many other operators around the world have also deployed first generation WiMAX networks, but none really have attained critical mass.

Last week, Clearwire announced it would be testing LTE on Samsung Electronics’ common base station platform, which it currently uses for its mobile WiMAX deployments. During the trials, Clearwire says it will collaborate with WiMAX IC leader Beceem (and other partners) to determine the “best methods for enabling end-user devices to take advantage of a potential multi-mode WiMAX/LTE network.”  Clearwire CEO Bill Morrow has said that LTE over Clearwire's network could offer speeds between 20M bit/sec. and 70M bit/sec., compared with 5M bit/sec. to 12M bit/sec. from other LTE operators. The difference is because Clearwire has so much radio spectrum to use.

Will Sprint follow suit and trial LTE?  In a recent interview, Matt Carter, the head of Sprint's 4G unit, declined to discuss whether the carrier might test LTE technology.  He told Computer World, "Our position is that we are singularly focused around WiMAX, and there's no wavering on that view from us."

"Does the amount of wireless spectrum [Sprint has available] give us the opportunity in some time to to convert to LTE or run LTE alongside WiMax? Yes. We built the 4G network in a manner to give us that flexibility," Carter said. "But we don't want to confuse the market and our ecosystem of suppliers and customers. We are deploying WiMAX."

Carter said various critics of Sprint, including some noted analysts, were wrong to criticize Sprint for launching "4G" service with WiMAX.  "There's clearly a possibility that we could make this WiMax available for prepay as well, and we're looking to extend our leadership in prepay. So there's no reason to believe WiMax will only be postpay," Carter said.

For more, please see  4G czar at Sprint backs WiMax 'singularly'

AW Comment:  We have been saying for a very long time that WiMAX 2.0 (IEEE 802.16m) would be DoA unless WiMAX 1.0 (IEEE 802.16e-2005) gained market traction.  That's not happening.  We were looking at Russia, Japan, Taiwan for leadership with India a potential dark horse.  Critical market mass has not been obtained yet, so I think it is too late to make mobile mobile WiMAX a mainstream market. 

The key is availability of hand held devices, eReaders and other gadgets.  The HTC EVO 4G smart phone (sold by Sprint) uses a lot of power and falls back to 3G in most places as WiMAX coverage is limited.  Without a huge market in WiMAX smart phones and other hand held devices, the semiconductor companies can't drive the cost down- the volume just isn't there without hand helds.  Intel's concept of a WiMAX MID (a gadget that's somewhere between a smart phone and tablet PC) hasn't happened either- not even for 3G.  And no tablet PC/e-Reader we know of supports or plans to support mobile WiMAX.

So we think that eventually, Sprint will have to shift to LTE, because that's where the mobile broadband ecosystem is going.

What do readers think?  Does WiMAX still have life and if so what are the driving applications?

0 thoughts on “Hold the Obit: Sprint pays $105M for spectrum, will focus on WiMAX

  1. It takes a lot of money to build networks, even a lot of time to generate large revenues from them. It very easy for folks to say that a carrier will switch from one technology to another. But is not inexpensive to actually do it. Also from a customer standpoint WiMAX and LTE are similar in the experience they offer. So if one cannot sell WiMAX, one cannot sell LTE. So overall the mobile broadband market will take several years to mature and for the number subscribers to grow in large numbers. WiMAX is leading the charge as it is more mature today. LTE will take another 3 years to mature. So till then WiMAX will have the market momentum over LTE. But it is quite likely for Mobile WiMAX(8032.16e) to cross the 10 million worldwide subscribers threshold end of this year or early next year. Also WiMAX smartphones have been doing well.

  2. Joseph

    Great comment!  Hope you can help Suhas Patil with his request for info about WiMAX availability  in Pune and Bombay (+ rest of India) as per previous email I sent you.    Thanks,  alan

  3. As a consumer, I would have questions as to what happens to a WiMAX-enabled handset that I purchase.  Will I have to do a forklift upgrade if LTE becomes Sprint/Clearwire's method for transmitting data?  On the other hand, as a consumer, I wouldn't be too concerned, given that the life of these handsets seem to be only about 2 years (if you are lucky).

    Also, from a consumer perspective, the iSpot device (http://www.clear.com/spot/ispot) from Clear turns an iPad or iTouch into the MID referenced in the article.  Granted, it isn't integrated, but it does provide Internet access for you and a bunch of friends for only $25 per month on devices that are popular.  This could be an interesting low-cost alternative for people who are looking to save a buck.  

  4. Ken,

    A Sprint PR lady told me that any iPhone or iPad can be a "4G" device by connecting to Sprint's portable WiFi/WiMAX hot spot.  I don;t buy that because it is not really mobile.  Someone on the go is not going to carry 2 devices and set up the personal WiFi/ WiMAX hot spot wherever they go before engaging the WiFi enabled smart phone/ tablet/ e Reader/ game machine to access the Internet.

  5. Complicating matters further, Sprint is in the early stages of a multi-mode network technology RFP, Sprint CEO Dan Hesse said recently, an effort that might include LTE–but he said no decisions have been made. "We haven't reached any conclusions," Hesse said in a recent interview with FierceWireless. "It gives us the flexibility, so that we can change or add new capabilities if we so choose."

  6. GLG Comment (they've always been anti WiMAX):
    Here are some challenges:
    1)      Ecosystem – Perhaps the element that will matter the most in the survival of mobile Wimax is the availability of devices, especially the smart phones. It is quite clear that devices drive subscribers hence driving the networks (Iphone is the example). HTC has offered Wimax devices and Samsung has plans to offer device later this year but will it be followed by other device manufacturers? So far big players such Intel, Cisco (Navini acquisition) are indicating of scaling back on Wimax, Cisco is no longer offering Wimax RAN (radio access network) and Intel recently closed its Taiwan operations. Both companies have denied that the rumors they are exiting Wimax completely. Nokia after offering its first failed Wimax device that unfortunately was launched after Sprint delayed its Wimax network deployment has so far not committed to another Wimax device. Motorola is set to provide an upgrade path for Operators to move their Wimax networks to TD-LTE, and so far I have not heard of a Motorola Smartphone device for Wimax. It looks like the participants of the Wimax ecosystem are no longer enthusiastic about the prospects of Wimax as they were in 2007.
    2)      Though Wimax network is an all IP based network and the early assessment was that the equipment would cost a lot less than the traditional 3G wireless equipment. However, with the rise of the Chinese vendors such as Huawei and ZTE, the cost of traditional network equipment has come down and that put pressure on the pricing of the incumbent equipment providers such as Ericcsson, Nokia Siemens and Alcatel-Lucent, therefore, it may now cost the service providers less to deploy LTE than 3G. According to an article written by Stacey Higginbottom, “Clearwire’s big bet on our Broadband Addiction”, “Mike Sievert, chief commercial officer at Clearwire, said that it cost Clearwire in mid 20’s per subscriber to build out the network, In contrast, analyst Chris King at Investment bank Stifel Nicholas, had put per sub cost near $20 for Verizon’s LTE network build out”. So the cost advantage that was once there with Wimax looks no longer applicable. 
    3)      A lot of folks in the Wireless world are already talking about the migration path of Wimax to TD-LTE. Sprint already has an EVDO (CDMA) network in operations, which it can evolve to LTE at some later point. It’s good that Sprint can claim to be the first to deploy the 4G network and they are now net positive in adding subs last quarter (a great sign for a dominant operator) but does it really makes sense to keep two 4G networks? Though migration may be costly for Sprint, in the long run the carrier will save on OpEx and will be much better off in operating in technology 4G network. Clearwire is also giving indications that it may evolve the Wimax network to LTE. Another big international Wimax operator, Russia’s Yota, which decided to build Wimax network and was testing Wimax 2.0 is now moving towards TD-LTE.  
    Based on my many years background in the Wireless infrastructure industry, I realize how essential is the ecosystem for any new technology to survive, if chipmakers don’t see a robust growth of subscribers then they won’t develop the semis, likewise, the infrastructure vendors won’t develop key network components and the handset vendors will shy away from manufacturing handsets that no one will buy. I was fairly bullish on Wimax in 2007, especially for the international markets but now like many others in the Wireless infrastructure industry, I am skeptical about the evolution of mobile Wimax. Unless there is a major LTE surprise, I see the trend that tells me that the sun may be setting for mobile Wimax evolution.

  7. Great article with a lot of perspective.  Note that Beceem has announced a combo WiMAX/LTE chip. Wil Intel do likewise?

  8. Intel has chosen to remain silent, despite its false promises of WiMAX MIDs and other devices.  The strategic alliance with Nokia last year was said to be a game changer, but I haven't seen any tangible results.  THe company is losing a lot of credibility, IMHO.

  9. We all should be very skeptical of what companies say about their future plans. WiMAX supporters  were overjoyed a year or so ago when Cisco announced WiMAX products for the home. Not only did that not happen, but they discontinued their entire line of WiMAX RAN equipment! Intel's agreement with Nokia was to "revolutionize mobile broadband" but there have been no tangible results to date.
    I would suspect Sprint will follow Clearwire's direction regarding LTE, after the latter completes their trials. After all, Clearwire is effectively Sprint's 4G subsidiary (they own over 51% of Clearwire).

  10. Sprint is taking reservations for one of its smartphones. Customers can go to Sprint's website and request that an Epic 4G unit be held for them. The actual purchase will be made Tuesday, Aug. 31, and the device will need to be picked up at a Sprint store.
    This Samsung product is going to sell for $250 with a two-year contract. That's $50 more the price of virtually all its direct competitors.
    Those who don't want to put in a reservation can buy this device starting on the launch day: Aug. 31.
    Preview of the Samsung Epic 4G
    This smartphone is going to follow on the heels of the very popular HTC EVO 4G, Sprint's first model with WiMAX. This 4G standard will give it peak download speeds of up to 12 Mbps, and average download speeds of 2-4 Mbps in areas where WiMAX is available.

  11. WiMAX performance vs coverage area vs power consumption of mobile devices (HTC EVO)
    Sprint says that subscribers should see up to 10 times the performance of a regular 3G connection. This is nice, but in actual practice you have to first find a solid 4G connection. In a city with established WiMAX coverage in most major areas, such as Las Vegas, life is good. You can leave the WiMAX modem turned on and it will happily connect to cells around town.    
    But if you're in someplace where 4G has just been turned up, like the Washington DC area, things are more challenging.   Leaving the 4G modem on means that it constantly trying to find a node for connection. No node, no connection, so if there's no node around, the process burns power at a fiendish rate, so most users have adopted the tactic of leaving the 4G modem turned off until reaching a destination and then flipping it on to see if you have good signal — yes, you're paying $10 extra per month for the service, but you have to keep it turned off because if it's not there, the 4G modem will run the battery down.  

  12. Current Analysis reports that Sprint  has introduced two new WiMAX-only broadband plans in select test markets as the operator's coverage has increased to 69 markets.

    The firm found that Sprint has launched what it calls the 4G Mobile Broadband Connect plan at $50, which is $10 less than its 3G/4G broadband plan. The plan is compatible with its newly introduced USB U1901 and is available in the test markets of Atlanta, Charlotte, Chicago, Dallas, Greensboro, N.C., Houston, Kansas City, Philadelphia, Salt Lake City and Seattle. In addition, Sprint introduced the 4G Desktop Modem Connection Plan for $45 per month as an alternative to fixed broadband connections. This plan is compatible with the Sprint 4G Desktop Modem CPEi25150 that connects to a broadband router to enable users to share connections in their homes and offices. Current Analysis said the devices that are compatible with these plans are priced at $50, which should ensure traction with customers.

    "While these plans are limited to a few markets, Sprint's 4G coverage has now increased to include 69 cities, which will increase its potential consumer base if the carrier wishes to extend the plans to all 4G markets," noted Current Analysis analyst Deepa Karthikeyan.

  13. WSJ:  Sprint Faces 4G Dilemma
    Carrier's Board Debates Whether to Let Rival T-Mobile USA Invest in Clearwire
    Sprint Nextel Corp. has bet its future on offering speedy data services to mobile devices over a new high-speed, "4G" network and has joined with upstart Clearwire Corp. to build it.   But Clearwire has a problem: It needs billions of dollars to finish building its nationwide network. And now Sprint, which owns 54% of Clearwire, must decide whether to fund the project itself or turn to a competitor for help.
    Sprint's board of directors is debating whether to let rival cellphone operator T-Mobile USA invest in Clearwire, three people familiar with the situation said.
    Such a decision would consolidate the U.S. telecom landscape by enabling the country's third- and fourth-largest wireless operators to use the same next-generation network.
    T-Mobile USA Chief Executive Robert Dotson said early this year that his carrier is looking at its options for 4G, including having conversations with Clearwire. However, T-Mobile USA hasn't put a proposal on the table, so no decision is imminent, and some Sprint board members are adamantly opposed to the idea, these people said.
    Sprint has the lead now with the country's only 4G network via Clearwire, which can offer speedy Web surfing and stream videos to smartphones and other devices. But it will face competition later this year from industry leader Verizon Wireless and next year from AT&T Inc. To stay ahead, Clearwire needs billions of dollars in funding, which would enable it to expand from its current base of 49 cities to the country as a whole. The company must also decide whether to stick with its current technology, or switch to a standard that has been adopted by Verizon and AT&T.
    Some Sprint directors support allowing T-Mobile USA, a unit of Germany's Deutsche Telekom AG, to make a sizable investment in Clearwire, one person familiar with the matter said. "T-Mobile would love to be in," the person said. But does Sprint "want to help them that much?" the person said. "And at what price?"
    Sprint directors "always talk about Clearwire," another person familiar with the matter said. Directors "are considering alternatives and would consider [T-Mobile] if they came forward," this person said.
    T-Mobile, which lacks a 4G strategy of its own, faces the choice of upgrading its own wireless network or partnering with another 4G provider such as Clearwire.
    The carrier doesn't yet need additional wireless capacity, but is "actively exploring a variety of options that would provide" it, spokesman Reid Walker said.
    Sprint's position as a founder of Clearwire allows it to block other companies from becoming strategic investors.
    Whether to allow T-Mobile under the tent is gaining urgency, as analysts expect Clearwire will need another injection of funding around year's end.
    Sprint, which merged its wireless broadband unit with Clearwire in 2008, invested $1.2 billion into the company in late 2009. Credit Suisse analyst Jonathan Chaplin estimates Clearwire needs $4 billion to cover 200 million people in the U.S. by the end of 2011, up from the 120 million people it expects to cover by the end of this year.
    Meanwhile, T-Mobile USA's options have grown as hedge fund Harbinger Capital Partners moves ahead with its risky plan to build a nationwide 4G network from scratch. Teaming up with T-Mobile USA could accelerate Harbinger's plans while giving the carrier its own access to wireless broadband.
    "The last thing Sprint should want is another competitor with a 4G network," Credit Suisse's Mr. Chaplin said.  Sprint must decide whether it makes more sense to allow new investors or enlarge its own stake and potentially take control of Clearwire, another option executives are considering. That could be done by buying shares from other Clearwire investors, which include Comcast Corp., Intel Corp., Google Inc. and Time Warner Cable Inc.  Some Sprint directors are fighting hard against a T-Mobile USA investment in Clearwire, one person familiar with the matter said. Giving T-Mobile a big Clearwire stake means "making a competitor stronger in an area of competitive advantage" for Sprint, this person said.
    Directors "are still struggling" with choosing their Clearwire investment strategy and haven't set a deadline for a decision, another person familiar with the matter said. Sprint CEO Dan Hesse has yet to endorse a particular approach, people familiar with the matter said.
    The question is ultimately a matter of price and the size of the Clearwire stake T-Mobile USA would want, one person familiar with the matter said. Sprint probably would insist that T-Mobile pay a premium share price because "there are benefits that come with the investment," including discounted service rates, this person said.
    Clearwire shares traded Tuesday at $6.41 on the Nasdaq Stock Market, giving the company a market capitalization of about $6.3 billion.


  14. Sprint rules out Clearwire purchase for now
    ByPaul Taylor in New York
    Published: September 15 2010 22:21 | Last updated: September 15 2010 22:21

    Robert Brust, Sprint Nextel’s chief financial officer, told investors that a Clearwire buyout would be too expensive at present. He was responding to analysts’ speculation that Sprint Nextel might seek full ownership of Clearwire in order to increase its control of operational issues such as plans to expand into new markets and adopt other 4G technologies. Sprint Nextel currently owns about 55 per cent of Clearwire with the rest of Clearwire’s equity spread between a group of cable companies including Comcast and Time Warner, and technology partners including Intel and Google.
    Clearwire is building a nationwide network based on a next generation technology called WiMax which supports much faster mobile data connections than the 3G mobile networks which are currently used.
    However Sprint Nextel and Clearwire have indicated that they may embrace a rival 4G technology called LTE which has been widely adopted by mobile network operators in the US and overseas. This, coupled with speculation that Sprint Nextel might want to reposition Wimax as a wireless alternative to fixed line broadband, has fuelled speculation that Sprint Nextel might seek to buy out its Clearwire partners.

  15. Sprint Executives Leave Clearwire Board, Possible T-Mobile Relationship Responsible?
     There is a belief that this is directly related to Clear’s desire to seek additional funding, likely from T-Mobile and their willingness to accept that funding even with Sprint remaining their biggest shareholder.
    The legal issue appeared to be a smokescreen, the people familiar with the matter said. They said they believe Clearwire is eager to pursue its own plans to build up its subscriber base and perhaps sell the company, efforts that are complicated by the heavy presence of Sprint.
    One legal expert said it wasn't necessary for Mr. Hesse and the other two directors to step down. "There's nothing in antitrust law that requires Sprint to remove its directors from Clearwire's board given its majority ownership," said Michael Swartz, an antitrust lawyer at Schulte Roth & Zabel. 
    The tension between the companies is rising at a critical time. Clearwire needs billions of dollars to finish building its wireless network. And Sprint must decide whether to fund the project itself or let Clearwire turn to a rival for help.

  16. At his Oct 27 Sprint Developers Conference keynote, CEO Dan Hesse was asked about Sprint's plans for LTE.  He answered that Sprint and Clearwire collectively have enough spectrum to support both from the same cell tower.  In other words, the existing or soon to be "4G" (Mobile WiMAX) customers would not be abandoned.  However, Mr. Hesse did not address the need for Mobile WiMAX to LTE interoperability and coverage.  In particular, will new buildouts be WiMAX, WiMAX and LTE, or LTE only.  If they are anything but WiMAX/LTE, then dual mode devices will be necessary to access the broadband wireless network.

    Despite many articles like this one – pointing out that IEEE 802.16e-2005 is NOT 4G- all the head honcho Sprint speakers referred to their mobile WIMAX service as "4G."  Dan Hesse said yesterday, "We were the first carrier to roll out 4G service in 2008."    At an earlier session, I asked a question referring to Mobile WiMAX rather than 4G, the Sprint presenter said, "Oh, you're using the trade name for our 4G service."  I had to bite my tongue to remain silent.

    Another issue is that Sprint does not give Clearwire credit for building out their "4G" network.  At this conference, CLRW was seldom mentioned in the "4G" Sesssions or in general sessions where "4G" was discussed.

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