As I explained in 73, and Thanks For All The Fish, I will no longer be writing very much about BWIA, including here on Independent Clearwire Blog. There's ample "content" and "expertise" about Clearwire available for readers that want to follow developments.
But I've been asked about the developments relating to Clearwire, Sprint / Nextel's Xohm Mobile WiMAX "venture", and their apparent intentions to create a consortium that will eventually lead to a widespread, if not national deployment of Mobile WiMAX systems in the US. This is potentially a seminal development in Broadband Wireless Internet Access, so as one of my final articles on BWIA and Clearwire as the "purest play" of BWIA, I'll offer my thoughts. CTIA Wireless 2008, the US wireless telephony industry's biggest conference, begins next week, and there are likely to be some developments announced, so I thought I'd get my analysis out ahead of that.
There are two primary issues relating to the formation of a US Mobile WiMAX Consortium consisting of Sprint/Nextel, Clearwire, Google, Comcast, Intel, and others.
The first is Sprint / Nextel's corporate weakness. If Sprint / Nextel had not been so poorly managed before, and since the Sprint / Nextel merger (the jury's still out on new CEO Dan Hesse), Sprint / Nextel would have already deployed Mobile WiMAX in several markets and would have solid plans to eventually deploy Mobile WiMAX in all major markets. But there's no way Sprint / Nextel's angry, activist shareholders will allow "diverting" scarce capital to an "unproven" new venture such as Mobile WiMAX. Those shareholders want profits and they only understand the old postpaid-expensive-voice-minutes business model for wireless telephony, so that's what Sprint / Nextel is going to deliver to them... to its eventual demise as the weakest of the "big four" US wireless telephony companies.
The second is the scarcity of reasonably-priced capital, and the "skitishness" of venture capital in the wake of the massive failures of the US financial services industries. If it weren't for this bad timing, Clearwire probably could have raised sufficient capital and/or partnered with other companies (including, or not, Sprint / Nextel) to begin deployment of Mobile WiMAX technology to replace its proprietary and uncompetitive NextNet Wireless / Motorola Expedient systems. (Expedient systems do everything they were designed to do and work very well... it's just that the performance it delivers is simply no longer competitive with higher-speed DSL, cable, and increasingly fiber Broadband Internet Access, and it's only on a par with current Broadband Internet Access options available from wireless telephony carriers.)
So, Mobile WiMAX in the US will end up being a "marriage" born out of weakness, not strength.
And, unless extraordinary vision is used to create this proposed consortium, it will ultimately fail from the disparate requirements levied upon it by its partners. Sprint won't want it to compete too aggressively against its Broadband Internet Access service over its CDMA systems... or wireless telephony. Clearwire won't want it to aggressively "obsolete" their investment in Expedience infrastructure; Comcast will want to restrict it from being "too good" a distribution mechanism for video content. Intel will want to restrict the user devices to those based on Intel's WiMAX chipsets. Google will want to insure that user devices are based on their Android reference design and "feature" their advertising-supported services. Etc. It's practically a no-win situation, and to lead such a consortium to real success would require someone with the extraordinary statesmanship and leadership skill... and no one comes to mind, except, perhaps Barack Obama if he doesn't have a new job after November.
So... is such a consortium absolutely doomed?
No... but, again, success is a real stretch, but here's my scenario.
To have any chance of success, the major players are going to have to surrender themselves by recognizing that in the current, and immediate future, business climate, they cannot succeed without "surrendering themselves". Period. (Likely, they won't be willing to do this, so see the above, which is the more likely outcome, by far). Sprint / Nextel will have to sell off their 2.5 GHz spectrum, existing Mobile WiMAX deployments. They'll want to keep "Xohm" - see below. Clearwire will have to be willing to be acquired... or... at an absolute minimum sell its US 2.5 GHz spectrum and its Expedience and Mobile WiMAX deployments. It might want to maintain its Clearwire brand independently - also see below. Comcast will have to agree to provide access to all its pole-attachment "rights" to enable the deployment of ubiquitous, low-power, small Mobile WiMAX infrastructure. Intel and Google will have to provide funds, but not be able to insist on Intel-based or Android-based or Google services be used; they will just have to compete the old fashioned way - winning business by being better, cheaper, and faster. Sprint and Comcast will both have to be willing to provide "services" on a wholesale basis - Sprint with interoperability with the legacy Public Switched Telephone Network (PSTN) and Comcast providing "backhaul" over its fiber infrastructure to new Mobile WiMAX nodes.
In short, for the consortium to succeed, the individual partners will have to contribute their strengths... and not saddle the consortium with their weaknesses.
But if they could actually do this... the new "AmericaMAX" (I just made that up...) service could end up being nothing short of amazing:
- A new wireless service based on the strengths of Internet Technology (perhaps even IPv6); with all the advantages of wireless - fast deployment, ubiquitous coverage, efficiency, and low cost. It could actually become the strongly preferred method of Broadband Internet Access.
- Ubiquitous deployment based on being able to deploy small nodes ubiquitously by using the combination of Sprint / Nextel's wireless sites and Comcast's neighborhood distribution network and ability to backhaul over fiber.
- Much higher speeds based on rapid advances in Mobile WiMAX and the network's access to very high-speed backhaul via Comcast... and Google.
- New video services based on not locking customers in to "walled gardens" but rather adapting to what each customer actually wants; for example caching the most popular YouTube videos at nodes rather than every customer pulling a popular video across the entire network and backhaul. That will be a bit bitter for Comcast, especially, but they have to realize that the Internet is marginalizing their entire "content" business model into a Stupid Network. Better to get with the new paradigm than to get dead by not doing so.
- Legacy telephony will be cheap; voice is "Kilobits" of data over a "Tens of Megabits" network. Voice services of all kinds should be co-equal on the network; the users of this generation make little distinction between IM, VOIP, telephony, wireless telephony... they just wanna communicate.
- All manner of devices will materialize to provide new types, and tiers of services. Portable devices will proliferate, including "phones" that are voice-mostly. Fixed devices will be created to provide higher speeds (better link quality) and longer range as needed. New service providers (they do satellite television now) will offer to install these new systems in businesses and households. Picocell / femtocell "repeaters" will rapidly proliferate by both professional installers and do-it-yourselfers, with backhaul automatically created from ample capacity on the network.
- Google has the ability to create a painless billing / administration infrastructure. And... most radically... perhaps it alone has the ability to monetize overall usage by its advertise-without-pissing-off-users capability. If a user prefers free service, they agree to see ads. If you'd rather not see ads, or want a premium service (like a live person for help), Google will be happy to bill you electronically. There won't be a conventional postpaid option - what an incredibly smart guy named Brian Andrew once called "the department of printing, stuffing, and mailing envelopes".
- I think the only logical corporate entity for this consortium is for Google to create it as a subsidiary and own the spectrum, receive the investments and the "wholesale" services contributions from the member companies... and then outsource almost everything.
- Sprint can market the resulting product as Xohm, Clearwire can use their brand, Comcast can make the resulting product part of its product mix, and perhaps even Google can apply their brand, maybe to the "free" version. But... most importantly, it will all be the same, exact product; only the branding and pricing will vary. That's critical for enough of a mass market to materialize.
But, besides the many... nearly impossible challenges above, there are two last key requirements for this to happen.
The first is that it can only happen (in the US) on the 2.5 GHz band. That's the sweet spot that's "right" spectrally - not too high, not too low in the spectrum, and it's big enough (~190 MHz). But it has to be "rationalized" - industry experts know what I'm referring to, but unfortunately it's too complex to go into here.
The second is that there cannot be any involvement from the conventional wired / wireless incumbent telephony companies such as AT&T or Verizon (Wireless). They're simply too invested in the status quo... if they're involved, their corrupting influence would be like a virus and ultimately doom the entire concept. Qwest has shown some encouraging signs under its new CEO; perhaps it might make a good reseller much like Xohm, Clearwire, Comcast, etc.
That's it. It could happen. I don't think it will, because I don't think the respective companies can overcome their individual agendas. But it might, and perhaps, in the end, I'm hopeful that it will. The US has a history of overcoming the conventional wisdom, especially when it comes to technological innovation. Given the power of (legacy) AT&T, the Internet shouldn't have existed. Given the power of IBM, the PC industry apart from IBM shouldn't have existed. Given the power of the US automotive industry, Tesla Motors shouldn't have existed.
So... such breakthrough innovation has occurred, and will occur again. In the end, whether "AmericaMAX" becomes reality is a simply a matter of intelligent people recognizing that it's needed and allocating the resources, and willingness to see it happen in the US.
By Steve Stroh
This article is Copyright © 2008 by Steve Stroh except for specifically-marked excerpts. Excerpts and links are expressly permitted (and encouraged).
This article was written and posted via Broadband Wireless Internet Access (BWIA); Clearwire service using a NextNet Wireless / Motorola Expedience Residential Service Unit (RSU).
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