Forbes.com interviewed Sprint CTO Barry West who leads Sprint’s “fourth-generation” (4G) broadband department, currently building a $2.5 billion to $3 billion mobile WiMax network.
Some shareholders aren’t convinced it’s a solid bet. But revenue from plain-vanilla cellphone calls is eroding, and carriers must bet on wireless data to drive growth. Right now, Sprint is leading the pack, says Forbes.
Forbes.com recently caught up with West at a trade show in Chicago.
Forbes.com: Why are shareholders now making noise about WiMax?
West: People are concerned about not getting a return out of the capital that you put into any venture. Anyone who invests in a mobile company is obviously seeing an annual investment program of billions of dollars. And you see the concerns come from, “Well, you’re investing in 3G, and now you’re building 4G. Have you made your returns out of 3G?”
The fact is that 4G is going to open up new revenue streams to the company, which, when you do the business model, it’s a very, very strong return for our shareholders. And that’s why the board is being very supportive; that’s why [chief executive Gary Forsee] is being very supportive.
Forbes.com: So far, you’re beating your rivals at getting customers to spend money on data services, despite missing out on exclusive content deals with companies like Facebook, Google’s YouTube, or News Corp.’s MySpace. What’s your secret?
West: We’re probably the most open of all the mobile providers in terms of the services we provide. It’s that open model which we’re going to bring to the WiMax network. We’re big believers in “you’re not just a telecom company–you’re a media company.” You’re providing for human beings not only voice communication but also information and entertainment.
Forbes.com: Does that mean that the “walled garden” approach–where carriers rope subscribers only to Web sites from which they get shared revenue–is dying?
West:You know, the thing is, it’s an essential game as long as you’re subsidizing the device. Or at least it looks very attractive–”If I direct you to my site, or the ones I have revenue shares in, I’m going to make a return on that.”
That kind of attitude puts people off. They want to go where they want to go. The way to win in that war is to have the most interesting site. But you do it because you put the subsidy into the device. If you’re not subsidizing the device, a la the WiMax model, you open up the power of the Internet.
You’re not walled in by your cable or DSL provider’s [default homepage]. If you’re too lazy or too dumb to move away from it, they always get a certain amount of revenue from that, but you can go anywhere you want. It will be the same in the world of mobile WiMax.
Forbes.com: But now that YouTube is open for all mobile surfers, and anyone with a good network socket can upload a video from their cellphone, will you have to block those types of transfers if they slow things down too much?
West: That’s not our model. In terms of uploading from current mobile phones, the process will take a long time, so the site’s going to have to sit there and wait for a long time. And the [quality-of-service] mechanisms are not there that could say, “I could send this one fast.” We don’t have the equivalent of the priority postal service, if you like. WiMax will have that.
“We will have 100 million covered and be in 35 markets by the end of 2008,” says Sprint’s Barry West. Clearwire should have its network converted to Mobile WiMAX in 2008, with coverage for 45 million people. “We’re doing for the Internet what cell phones did for voice 20 years ago,” says Clearwire CEO Ben Wolff. Clearwire in Portland will apparently use Motorola’s WiMAX Access Points paired with Motorola clients to deliver carrier-class mobility capable of delivering voice and multimedia.
WiMax Trends believes that the deals between Clearwire and both DirecTV and EchoStar are so compelling, the outcome could be a doubling in the value of all three organizations. Clearwire’s frequencies now cover 205m people in the U.S., according to their SEC filing. Clearwire also owns frequencies in Europe, covering 117m people, and a recent German auction adds coverage of 82.5m more people.
NextWave Wireless has acquired a considerable amount of spectrum in the AWS and 2.5GHz bands across the US and plans to launch WiMAX-based services, but like Qualcomm it plans to use these frequencies to develop, test and showcase its own technologies and then transform itself into a silicon-driven company. A second generation 802.16e chip family, NW2000 is expected in early 2008 and will support wave two WiMAX profiles and feature an integrated WiMAX/Wi-Fi system-on-chip. NextWave bought IP Wireless earlier this year which uses a CDMA version of WiMAX.
The AWS licenses acquired by NextWave, cover 63 million people and include markets such as Pittsburgh, Puerto Rico, Indianapolis, Sacramento, New Orleans, Tulsa, Little Rock, El Paso, Albany, Louisville, Sarasota, Anchorage, and Fort Myers. During the auction NextWave bid a total of $115.5 million for the 154 AWS licenses at an average price of $0.12 per MHz-POP.
Horizon Wi-Com is trialing its 2.3 GHz broadband service in major U.S. cities in the Northeast region using 802.16e compatible equipment from Navini Networks (pdf). Horizon Wi-Com purchased the WCS A Block from Verizon. They own 10 MHz of A Block WCS spectrum in many major cities. Phase I of the deployment will implement service in Boston, New York, Philadelphia, Washington DC, Baltimore, Pittsburgh, Buffalo, Richmond, and Cincinnati.
WCS stands for Wireless Communication Services with Block A using 2305-2310 MHz paired with 2350-2355 MHz.
Here’s the FCC’s list of Licensees for Broadband WCS and Broadband Radio Service (BRS).
Investment on pre-4G wireless systems will reach a cumulative total of $13bn by 2012, says WiMax Trends. The main systems attracting this global spend will be 802.16e and its successor 802.16m, and LTE, but while the latter will see a strong uptick in growth from the turn of the decade, it will not overtake WiMAX in capex terms until 2014.
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