By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Sprint Nextel's rollout of mobile WiMAX service will likely go more slowly than previously planned now that the company and wireless-broadband operator Clearwire terminated a letter of intent to jointly build a national network and market the service under a common brand.
The planned joint venture, announced only a few months ago, was promoted as "fostering quicker, broader and more efficient deployment of a mobile WiMAX broadband network than either company could accomplish on its own," the companies said at the time.
Although Sprint has changed its deployment plans, it continues to position its Xohm-branded mobile WiMAX network as offering wireless broadband to portable PCs and other portable devices and to consumer electronics devices, such as digital cameras, with low-cost embedded WiMAX chips, a spokeswoman said.
As the two companies tried to iron out details of their joint plans, the spokeswoman said, they "delved into a level of complexity … that didn't fit in with the type of positive customer experience" that Sprint wants to offer. In recent weeks, she noted, the carrier has begun to focus heavily on two core strategies: "simplifying the business" and "improving the customer experience." The carriers' weakening financial performance and loss of subscribers led to the new focus, analysts have said.
Despite its separation from Clearwire, Sprint intends as previously planned to soft-launch mobile WiMAX service by the end of the year in Chicago and Washington-Baltimore and initiate "a commercial launch in 2008," said Keith Cowan, Sprint's president of strategic planning and corporate initiative. The pace of that 2008 launch, however, wasn't described in detail, and it's more than likely to be slower than the pace under the original joint-buildout proposal.
Under the scuttled build-out plan, the two companies would build out their respective 2.5GHz networks to a combined population of about 100 million people by the end of 2008, with seamless roaming enabled between the deployed areas. Sprint was to build in markets covering about 70 million people by the end of 2008, a spokeswoman said, and Clearwire was to build in markets with a population of about 30 million by the end of 2008, she said.
Now, however, Sprint isn't saying whether it will, on its own, meet its part of the joint-buildout timetable. All that the company would say was that "in light of this announcement, Sprint is reviewing its WiMAX business plans and outlook, and the company expects to comment further on these topics early next year."
Whatever Sprint's timetable turns out to be, it's still required by the FCC to build out a 2.5GHz network in at least 20 markets, or basic trading areas, with a population of at least 30 million people, the spokeswoman said. Sprint owns 2.5GHz spectrum in markets covering 85 percent of the U.S. population, including the top 100 markets.
Under the letter of intent, Sprint was to focus its long-term efforts primarily on geographic areas covering about 185 million people, including 75 percent of the people located in the 50 largest markets, while Clearwire would focus on areas with a population of about 115 million people.
Although the two companies ripped up their letter of intent, Sprint said it expects to cooperate with Clearwire on service launches in such areas as roaming, frequency interference coordination, spectrum exchanges, technology development, and network standards, the company said.
Under the previous plans, cooperation was to have been much more extensive. For example, Sprint Nextel and Clearwire would build their respective portions of the nationwide network, enable roaming between their territories, and work jointly on product and service evolution, infrastructure sharing, branding, marketing and distribution.
Sprint Nextel and Clearwire would market mobile WiMAX services under a common service brand, and Clearwire would offer mobile WiMAX services in Clearwire's territories through Sprint Nextel's retail stores as well as through its own distribution channels. Sprint Nextel also planned to provide dual-mode (CDMA-WiMAX) service nationwide over both its own portion and Clearwire's portion of the network.
Sprint Nextel was also to take the lead in establishing relationships with national distributors and other potential strategic partners, including wholesale or mobile virtual network operator (MVNO) arrangements. Clearwire would also be able to offer Sprint Nextel's 3G cellular voice and data services as part of a bundle or on a standalone basis and to provide dual-mode service as well.
Clearwire currently offers fixed-wireless broadband service to homes and small business in the 2.5GHz band using a pre-WiMAX technology. The company also provides wireless broadband to a PC Card modem for use with laptops with handoff capability at low vehicle speeds. Clearwire operates service in more than 400 cities and towns in 16 states.
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