Sprint's West: WiMax on Track

CHICAGO -- NXTcomm -- In his latest market update today at NXTcomm, Sprint Corp. (NYSE: S) CTO Barry West reiterated that the operator is on track to "soft launch" two WiMax markets in December 2007 and is keeping its options open vis-a-vis the wireless broadband business unit that is deploying the network.

Unstrung button-holed West briefly after his keynote to ask about reports that Sprint may be considering a link-up with rival WiMax operator Clearwire LLC (Nasdaq: CLWR), a cable company partnership, or an outright spinoff, to further finance its $3 billion WiMax deployment. West stuck to the company line that the operator is considering at least some of those options as a possibility.

"We don't need the money; we can afford to build the network ourselves." he says. "The management team is looking at ways of unlocking value for shareholders." (See Sprint: WiMax Options Open.)

West says that Sprint has the "best spectrum position of any major carrier in the U.S.," but this "pole position" is not reflected in its current $22.08 share price. Indeed, the firm today also announced plans to buy some spectrum from Bell Industries Inc. for $13.5 million in cash.

So the company continues to consider ways to "unlock the value" of what West clearly sees as a precious asset.

The WiMax rollout is running to schedule, according to West. Chicago and Washington, D.C., will be launched in December 2007. Nineteen more markets will follow in April 2007, and the operator hopes to cover 100 million in the U.S. by the end of 2008.

West once again spoke of his desire to get WiMax into as many devices as possible. The company is already working with ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) and others to try and bring WiMax to a range of consumer devices.

This is crucial for West, as volume sales will help to drive down the cost of the WiMax chipsets so that the firm doesn't have to subsidize handsets as so many operators do today. He says the cost of WiMax silicon is $25 to $45 now and will drop further.

"If you don't get away from subsidies, then this model won't work," he says.

— Dan Jones, Site Editor, Unstrung

IPobserver 12/5/2012 | 3:06:09 PM
re: Sprint's West: WiMax on Track Hi Ziggy:

If OFDMA and IP technologies do have a major impact on the mobile market, then it's likely to also impact business models at some point.

NetCos, Shared RANs, and a general "horizontalization" of the industry could be part of that.

But I agree on your point (if I understood it right), the firms that make the investment in infrastructure will want to retain control and "capture value."

Not sure the two things mutually exclusive.

Note that network sharing is part of the WiMAX Forum Network Working Group Release 1.5 specs scheduled for next year. I'm told that came from the operators.
lrmobile_Ziggy 12/5/2012 | 3:06:22 PM
re: Sprint's West: WiMax on Track I agree that a lot of models are possible. Which one will prevail is the multi-billion-dollar question.

As far as I know, operators have been really reluctant to put handsets with Wi-Fi capability in the end of their users (and that's probably why RIM doesn't even have one yet). They usually fear that they will lose control over the access networks selected by the user. They surely don't like the fact that one can use a smartphone, connect to a 3rd-party Wi-Fi hotspot, send/receive emails without having to pay them a cent, or worse, place a VoIP call for a fraction of the cost.

Now imagine all of these WiMAX-enabled laptops and smartphone hitting the market (without being "locked" to any RAN), and one or more NetCo(s) providing RAN for multiple operators, including most likely some of the current MVNO's like Virgin Mobile. What is Sprint's value proposition in that scenario? What can they do better than MVNO's with strong brands?

I agree that operators can come up with applications, but the incumbent operators have not been that great at it so far. They even have to rely on third parties to provide push email.

I'm really skeptical that the likes of Sprint will let go control over the RAN so easily. Sharing infrastructure is one thing, but leaving it altogether to an independent NetCo is a risky endeavor.
IPobserver 12/5/2012 | 3:06:22 PM
re: Sprint's West: WiMax on Track Ziggy, how would you answer your own questions?

There are lots of ways to setup up a NetCo model.

In mobile, its business logic, not regulation, that informs decisions about how this is done. The network isnGt open to just anyone, like the local loop is.

It's likely possible to manage your own QoS in a shared RAN... but it depends how it's set up, which generation of technology you're using, etc.

And operators can still provide applications.
lrmobile_Ziggy 12/5/2012 | 3:06:22 PM
re: Sprint's West: WiMax on Track WiMAX and other upcoming technologies will probably impact significantly the way operators are generating value. They are evolving from providing everything to their captive users, to providing IP connectivity with differentiated QoS to support the plethora of existing and new applications that the market will come up with.

If operators no longer own the applications, and if they rely on a NetCo to provide the IP pipe with differentiated QoS, what is left for them? Branding and customer management?
IPobserver 12/5/2012 | 3:06:23 PM
re: Sprint's West: WiMax on Track Without getting into the debate of WiMax vs. 3G again

Given Sprint is doing WiMax, it could make sense to structure the business unit as a kind of "NetCo for the RAN" and grant access to other service providers.

This is what many operators in Europe are thinking about relative to LTE. ItGs the same story for potential WiMax operators.

I speculated on this in a recent research report. Here's the summary:
freetoair 12/5/2012 | 3:06:25 PM
re: Sprint's West: WiMax on Track "The management team is looking at ways of unlocking value for shareholders."

"Given the level of investment required, the significant risk inherent, as well as considering our poor performance and challenges in our core businesses, the shareholders and other coherent individuals, have indicated we need to get creative and find some way to fund what Intel, Motorola, Samsung and others are not subsidizing, and transfer those costs to others or onto another balance sheet, lest we wish to "spend more time with family".

"...on track to "soft launch" two WiMax markets in December 2007"

"While I will not be here in December, I am sure that one of our "test bed" sites can be used to declare a "soft launch" has been achieved. You guys understand that right? Cool. But lets face it, if it is not achieved it will clearly be due to a failure by the equipment vendors to deliver. But I have been assured by our suppliers that the schedule is on-track and that we will be very very pleased. x/x/
Keeping 'em crossed.

Again remember Sprint / Nextel has many objectives here and you need focus on the vision for now and not the details. We have been in the game for a long time, as have many of our friends, we know how to play the table - comprendere?. So work with me here for now, there is a time and place for everything. Look at history and you will find all you need to know. Let's not lose any sleep about it now -- ok? This is news, and that is good for you, so run with it. Gotta go the cjet is waiting...you are the man!
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