Clearwire, Sprint Nextel Set Course for WiMax
Thursday, May 8, 2008
If the $12 billion venture formed by Sprint Nextel and Clearwire yesterday works out, your cellphone may turn into a far more powerful, versatile and perhaps costlier mobile device.
The new company, called Clearwire, wants its customers to be able to use mobile phones and laptops nearly anywhere in the country to watch movies while waiting for the bus, turn on "Dancing with the Stars" while waiting for the soccer game, surf the Web and hold video conferences on laptops while riding along Interstate 66.
But don't cancel that home Internet service over cable or DSL just yet. Although the new wireless connection, called WiMax, should be much faster than what's available on today's cellphones, it won't be as fast or as reliable as the pipes that bring cable television, Internet and phone service into houses from the street. And though it is being tested now, expanded service is about two years away.
The companies aren't saying how much the service will cost. A few analysts estimate it at $40 to $60 a month. At first, at least, it would most likely be an extra rather than a substitute for the monthly phone, Internet and paid television services that cost many customers $150 to $200 a month now.
Craig Mathias, an analyst at Farpoint Group, said the technology will be picked up first by business users who want to be able to access their office network from remote locations and send large e-mails over cellphones on the road.
Sprint sees WiMax as an opportunity to set out on a path toward recovery after a subscriber exodus and since its troubled merger with Nextel Communications in 2005.
"This enhances our competitive position substantially and for those who only have DSL as a choice, it gives another choice for true mobile broadband," Sprint's new chief executive Dan Hesse said in an interview.
Consumer advocates hope WiMax will help simplify various telecommunications and television subscription plans. Eventually, broadband wireless should allow consumers to cancel other subscription-based Internet and phone services, Chris Murray, senior counsel of Consumers Union said. Free Internet phone services like eBay's Skype along with Web-based video should be used over the network, he said.
"The reason we've always been excited by broadband via wireless is not because it gives consumers the possibility to do a lot of new nifty things, but because it has the possibility of saving people a lot of money," Murray said.
However the many uncertainties that surround the technology make it unclear when that could occur. WiMax requires a complex and expensive technological infrastructure of cell towers and underlying fiber-optic systems that is expected to take at least two years to build before the service could be deployed to most areas of the United States.
The venture, backed by $3.2 million in investments by such companies as Google, Comcast, Time Warner and Intel, is considered a victory for Hesse, who has been charged with reviving the wireless operator, which saw an exodus of 1.2 million subscribers in 2007.
A WiMax partnership with Clearwire dissolved last November after the ouster of Sprint's former chief executive, Gary Forsee. When Hesse took over as chief executive last December, he revived the deal by bringing in outside investors and creating a plan that included raising an additional $2.3 billion in private funding.