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This Week in WiMax

2:30 PM -- This week in WiMax, here are the big issues, as I see them:

Our WiMax crystal ball sees 'hybrid' 3G/4G service plans proliferating for WiMax in 2010
Unlike AT&T Inc. (NYSE: T), which has been so good at selling Apple's iPhone that it now has to contemplate the idea of cutting back on its customers' network usage, the nascent national WiMax network being built by Clearwire LLC (Nasdaq: CLWR) has bandwidth to burn -- and not many customers taking advantage of it.

One of the big problems I see is related to Clearwire's decision not to subsidize devices -- perhaps a necessary option for a company that doesn't have multiple billions to spend, but nevertheless one that keeps customers on the sidelines, unsure of the value proposition of buying a connectivity device that only works in selected cities.

The solution to this chicken-and-egg dilemma for WiMax seems to be the so-called "hybrid" option, where a customer purchases a dualmode device that can access both a 4G WiMax network when one is available, and a 3G cellular one when WiMax isn't around. Clearwire majority owner Sprint was the first to offer such a plan last year, centered around its dualmode USB dongle.

The hybrid dongle seemed like a no-brainer for highly mobile road warriors, the types who need some kind of connectivity wherever they go, and who might want or desire a faster connection in WiMax-enabled cities (a list that now includes Chicago, Dallas, Philadelphia, Atlanta, Las Vegas, and Portland, Ore., just to name a few). It seems even more attractive now that Sprint is offering the dongle itself for free with the purchase of the $70 monthly service plan.

Clearwire and its cable-company partners, Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Time Warner Cable Inc. (NYSE: TWC), are also now able to offer their own versions of a hybrid dongle, thanks to the Clearwire consortium that gives all partners access to resell Sprint Corp. (NYSE: S)'s 3G services. The hybrid plan also seems a natural fit for the so-called Pocketspot devices we talked about last week, since the hybrid/Pocketspot combo brings that same good/better flexibility to all your local WiFi devices, and not just your laptop. It's easy to see companies purchasing a few of these cards and mobile routers for traveling group use, or for random use on a check-out basis.

And just as we expect to see more versions of the Pocketspot emerge this year (we are guessing Sprint's big CES announcement might have news in this arena), so too do we expect to see new, more flexible pricing plans -- why not a 3G contract for a lower price, and a daily fee if you decide to test out the WiMax option? How about a prepaid version, good for either 3G or 4G? While we're not quite at the spot yet where such devices might offer the ability to connect to multiple service providers, that's not a leap that's unimaginable in the near future. As radio circuitry gets smaller and cheaper, the more connectivity a device has, the better -- so expect pricing plans to follow the devices and offer the same kind of flexibility, sooner rather than later.

Plugfest
Need to know more about Clearwire and WiMax? Our second version of the Clearwire NTK report, which covers Clearwire events from June through September, costs less than a large beer at the local Sprint Nascar race. Just $4.95 at the Sidecut store. Also available for the Kindle. Available now for free download is our WiMax Business Deployment Guide.

— Paul Kapustka is the founder and editor of Sidecut Reports, a WiMax analysis site and research service. He can be reached at [email protected]. Special to Unstrung.

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