WiMax Doomed?

WiMAX Doomed? Not.

Posted by Sam Churchill on October 3rd, 2008

C/Net’s Marguerite Reardon says Sprint’s new 4G network could be heading down the same doomed path as EarthLink’s citywide Wi-Fi networks.

It may only be a test bed for future WiMax deployments, but I think the business model Sprint is using in Baltimore looks eerily similar to what EarthLink attempted to do with its citywide Wi-Fi business.

Like EarthLink, Sprint is targeting incumbent cable and DSL providers with its service. The big difference is that it’s also offering mobility. But…most people subscribing to the service will likely only be as mobile as they can be with an air card plugged into their laptop.

And even though Sprint is competing directly with fixed broadband providers, it is not offering customers a huge discount. The home service, which requires users buy a $79 WiMax modem, costs $25 initially, but will eventually be priced at $35 per month. It’s also offering a mobile only service, which requires users buy a $59 WiMax wireless card for their laptop. This service starts at $30 and will increase to $45 after six months.

These prices are not drastically different from other broadband options. In Baltimore, Comcast offers a 6Mbps download service for about $43. Verizon Communications offers a 3Mbps DSL service for about $30 a month.

This was the same conundrum that many EarthLink customers faced. And in the end, most consumers didn’t see enough differentiation to switch to Wi-Fi. I expect the same thing will happen with WiMax.

Reardon overlooks three things:

• Value: Twice the speed of cellular at half the cost.
• Convenience: No 2-year “contracts”, with day passes available.
• Bandwidth: Cellular companies won’t have 120MHz available, now or in the future.

AT&T won’t have LTE for 5 years, according to AT&T’s Hank Kafka, VP of Architecture. Then it will be bandwidth constrained. A “pick two for life” WiMAX option covers two different WiMax devices for $50 a month — for the life of your service. Clearwire expects to cover 16 million U.S. citizens by early next year and about 140 million POPs by the end of 2009.

Clearwire, Sprint, Cable and Google are going for the kill. I believe they will succeed. I don’t own any telecom stocks, but I think WiMAX was the best move Sprint ever made.

WiMAX may have a bigger impact outside the United States.

BSNL has deployed WiMAX across 10 cities in India, with the help of SOMA Networks, and aims to cover 16,000 to 18,000 rural villages by the end of 2009 while Indian telco Tata is rolling out a $1 billion WiMAX network in 15 major cities. By 2012, the Indian government hopes to link 500m citizens to the internet via more than 100m broadband connections and devices, the bulk of them wireless.

source : dailywireless.org