Post-Forsee, Whither Sprint's Xohm Mobile WiMAX Service?

Longtime readers know that I rarely cover personnel issues of BWIA-related companies, preferring to focus on technology, products, services, and operations. But every once in a while, a personnel change at a BWIA-related company seems to merit discussion here, and last week's (October 8, 2007) the abrupt "resignation" of Sprint / Nextel's CEO Gary Forsee (Google News link - perhaps short-lived) is one of those rare personnel changes that merits discussion.

The reason is that in the wake of Forsee's "resignation", many pundits are calling into question Sprint 's commitment to go forward with full deployment of its announced Mobile WiMAX service, Xohm. While they're right to ask the question... few (none?) have braved a best guess / answer... but I will.

(Click below to continue the story.)

As background, I explain some of my reasoning in a previous article - Clearwire and Sprint / Nextel Likely To Combine 2.5 GHz Mobile WiMAX Deployments.

So... Sprint / Nextel is a company in deep, deep crisis. In addition to the myriad wireless technological issues it must to overcome to move forward, Sprint / Nextel is hemorrhaging unhappy customers (some abandoning Sprint / Nextel in disgust, some lured by behemoth competitors AT&T and Verizon Wireless), and many at (legacy) Sprint are demoralized and still reeling from the dual crises of Sprint's divorce of its wireline heritage (now Embarq Holdings Company LLC) and the relocation of Sprint's executive headquarters in Kansas into the merged company's headquarters in Virginia, where Nextel was headquartered.

But the biggest crisis at Sprint is probably deeply unhappy investors.

Those investors are yearning from the good old days of rapid growth, high Average Revenue Per Customer (ARPU), and those glorious early years of no legacy technological baggage. And rising stock prices, of course. That second-to-last point deserves some brief explanation; Sprint, unlike AT&T and Verizon Wireless started (wireless) life using only 1.9 GHz spectrum and "2.5 / 3.0 G" Code Division Multiple Access (CDMA) digital technology, as opposed to "dual band 800 MHz / 1.9 GHz and multiple modes such as Analog, IS-95B, Time Division Multiple Access (TDMA), and Cellular Digital Packet Data (CDPD). Technologically, growth at Sprint was pretty simple - build out more sites to provide new coverage areas, and subdivide existing cells to accommodate customer growth.

Forsee and Nextel's then-CEO and President Timothy Donahue made a daunting two-phase technological gamble in combining the two companies. The first gamble (both are huge) was that to reduce interference to public safety two-way radio systems, Nextel customers would be  migrated from using 800 MHz devices and network to a 1.9 GHz network that used newly-allocated and existing spectrum. The performance characteristics of wireless systems and devices operating at 800 MHz are, to put it simply, very significantly different than wireless systems and devices operating at 1.9 GHz.

The second gamble was to migrate happy Nextel customers from their built-to-purpose Push-To-Talk "integrated Digital Enhanced Network" (iDEN) handsets and network to an "equivalent" service operating over Sprint's wireless telephony infrastructure operating on CDMA technology. iDen and CDMA are two vastly different systems; CDMA was designed for (full duplex circuit-switched) telephony, not simplex, rapid-turnaround, low-latency push-to-talk operations, and that profound difference amounts to unhappy... and now former... Nextel customers.

In my view, Forsee's abrupt departure, along with Sprint's lagging stock price and the ongoing difficulties Sprint / Nextel is having with Public Safety agencies and the FCC over the 800 MHz to 1.9 GHz transition makes it clear that that Sprint / Nextel's transition from 800 MHz / iDEN to 1.9 GHz / CDMA has not been a success.

All of this long, drawn-out explanation is the primary... foreground... context from which to contemplate the ultimate fate of Xohm.

(To be continued on Wednesday, October 17, 2007 - link).

Comments

[Brandon Fouts]

Many don't realize how much money is in Telco industry. Sprint/Nextel nearly the size of MicroSoft? And the FCC usually gets more Lobby money than any other Fed agency - more than Defense or FDA.

Now we add the complexity of fast pace technologies -wireless, computers, internet- and of course Wall Street - investment bankers, IPOs, go public, go private, mergers.

Now consider Chairman of the Board and CEO. The Board was designed to be a check and balance to the executives of corporations. What are the problems of one person have both jobs-Chairman/CEO?

You can figure out the obvious of doing half a job and the conflicts of interests. So why is this the US corporate model? Because you can steal, I mean earn enormous amounts of money. CEO salaries -not to mention golden parachutes and retirement packages- can only be justified by those sharing in the enormous earnings -of the Chairman/CEO and Wall street. Actual earnings of the company seem a minor interest. Scandals? Read about them all the time.

Well, it is interesting times. And I guess it is the below executive suite managers that some how manage to keep these corporations working, even if barely. US internet/telco not even in the top 10 for consumer value/performance on the access side. Content a different story.

Now if I could just figure out how to benefit from the lower dollar exchange rate... well, you and I better just get back to work. I don't see where it is all going. It continues to be interesting, and thanks to Steve for his insights.