WiMax gets closer and further away at the same time

A strangely cryptic article in the New York Times today announced that several companies had banded together "to build the first of a new generation of nationwide wireless data networks" in the US (link). I read it and thought to myself: what, another new vaporware wireless technology? I couldn't make sense of the article, so I went to the websites of some of the companies involved. It turns out the announcement isn't a new vaporware wireless technology, it's my favorite old vaporware wireless technology, WiMax (link). Sprint finally figured out what to do with it.

The announcement was both interesting and supremely frustrating. The interesting part was that Sprint has brought several promising investors into WiMax, including Google. That's right, Google is launching a wireless network, if only as a minority investor. (And it got a sweet deal, which I'll explain below.) The unbelievably frustrating part is that Sprint has pretty much slipped the deployment plan for WiMax by another two years. It's hard to get excited about a new technology, no matter how great the investors, when I have zero confidence in the companies' ability to deliver.

Here's what was announced:

Sprint and several companies have banded together to buy Clearwire, the other wireless company that had been building a WiMax network in the US. Clearwire will be merged with Sprint's WiMax division, the company will be managed by a mix of Clearwire and Sprint executives, and will be headquartered at Clearwire's site in Washington state.

Investors in the merged company, to be called Clearwire, include Google, Comcast, Intel, TimeWarner Cable, Bright House Networks, and Trilogy Equity Partners. Intel and Comcast are investing about $1 billion each, TimeWarner and Google about $500 million, Bright House $100 million, and Trilogy $10 million.

Google gets to be the preferred search provider for both Sprint and Clearwire, will provide apps (including Gmail, YouTube, and Maps) for bundling with devices, and Clearwire will sell devices running Google Android. Google and Clearwire will also partner to develop advertising, applications, and create the operating principles for the network (link). Google said it will work with Clearwire to create:

An open Internet protocol to work with mobile broadband devices...and implementing other open network practices and policies....The network will: (1) expand advanced high speed wireless Internet access in the U.S., (2) allow consumers to utilize any lawful applications, content and devices without blocking, degrading or impairing Internet traffic and (3) engage in reasonable and competitively-neutral network management.

Intel will provide WiMax chips (which it was doing anyway), and Sprint, TimeWarner, Comcast, and Bright House will all become Clearwire resellers.

The new company will be 51% owned by Sprint, and its governance structure is so nuanced that I won't even try to explain it here.

As part of the announcement, Sprint slipped in an estimate that the new Clearwire network will reach 120 million to 140 million people by the end of 2010 (link).

What it means

Death to the Xohm. On a personal basis, the most exciting part of the announcement is that Sprint is apparently dropping the brand name Xohm, which it was using for its WiMax services. I am very sympathetic to the troubles that companies have finding brand names that aren't already trademarked. But even by my lowered standards, I thought Xohm was a bizarre name. To me, it sounded like something you'd read in a bad science fiction novel. The Xohm would be a race of homicidal crustaceans bent on destroying humanity.

"Captain, the Xohm have deployed a quantum weak force destabilizer!"

"Good God! That could rupture the very fabric of space-time!"

Google gets a wireless network. The company that made out like The Xohm in this deal is Google. For just $500 million (little more than gas money for the corporate jet in Google terms), the company gets preferred placement for its services on both Clearwire and Sprint; a showcase for its apps, advertising, and OS; and the opportunity to design the business model for a national wireless network. No wonder Google didn't bother to bid seriously in the recent US wireless spectrum auction -- why build a network when you can play with one for a tenth the price?

Comcast, Time Warner, and Bright House all get quadruple play options. They can pair Clearwire services with their current cable businesses to deliver advanced bundles of wireless services, Internet access, telephony, and television.

Will it succeed?

The reaction to the deal on some prominent tech blogs seems to range from lukewarm (link) to intensely negative (link). But I think there's a lot to like about it. The involvement of Google means we're very likely to get a pretty much open ecosystem on a major wireless network, which Silicon Valley has been collectively screaming about for years. The size of the investments mean there is a lot of money available to build out the network. People ought to be dancing in the streets here, but instead most of them appear to be either yawning or throwing spitwads.

I'd be out there dancing myself if it weren't for the slip in the schedule. A year and a half ago Sprint announced that its WiMax network would reach 100 million people by the end of 2008 (link). Now Sprint says that by the end of 2010 the network will reach 120-140 million people. So in the last 18 months, the schedule has basically slipped by 24 months. It's going backwards. At this rate we'll have passenger rockets to Pluto before we have WiMax service.

Hopefully the management of the new Clearwire will be dominated by people from outside Sprint. I want to believe that they can build out this network; we need it both for the service itself and as an example of how to grow an open mobile ecosystem. But it's very hard to trust people who have missed their targets as badly as these guys have.

Some other interesting commentary on the deal:

Muni Wireless on the cable companies' motives for investing (link).
Fierce Wireless explains the ownership structure (link).
Sprint's amazingly complex press release (link).


Thanks to Xellular Identity for including last week's post on Adobe in the latest Carnival of the Mobilists (link).


Elia said...

If I read between the lines on this one, it may also be interpreted that this also just opened up Sprint's network to developers without restriction. You wrote (quoting the agreement):

"(2) allow consumers to utilize any lawful applications, content and devices without blocking, degrading or impairing Internet traffic"

As it stands that Sprint will be motivated to include WiMax chips in every one of their devices, it would seem to me that this has implications on Sprint's closed-architecture model as well. Or am I reading a little science fiction into this?

Michael Mace said...

Hmmm, I had not thought about Sprint including WiMax chips in all of its phones. That's possible, but I haven't heard them ever commit to doing that.

I don't think we should assume that Sprint will adopt Clearwire's policies on its network. Sprint is already relatively open to apps on its smartphones, although it doesn't allow open selection of devices (something that is tricky to implement on CDMA in the US because there are no SIM cards).

Joel West said...
This comment has been removed by the author.
Joel West said...

My reaction to the WiMax announcement was is this all? Intel once vowed that WiMax would be the next WiFi, become ubiquitous, free us from carrier domination.

If this complex partnership with America's most troubled major carrier (and a failed WiMax startup) is the only major WiMax offering in the US, where's the upside -- either here or RoW?

Where's the economies of scale? Why would laptop makers bundle WiMax the way they bundle Wi-Fi? How does WiMax become a technology that people use traveling the world over, as we do with Wi-Fi?


PS: you should delete the spam posting

Michael Mace said...

Thanks, Joel. I pulled the spam comment.

Sometimes it's hard to spot spam that looks like a genuine comment. Thanks for pointing it out.