Like many technologies ballyhooed before the first customer use, WiMax hasn't moved smoothly from the development lab to the mainstream. That's compromising Sprint's plan to use WiMax to support wireless services for small and midsize businesses.
The WiMax specification falls under the IEEE 802.16 standard. The emerging high-speed networking option supports transmission speeds up to 70 Mbps and comes in two versions. The first works for point-to-point applications and is viewed largely as a carrier network technology. The second, and more important, version supports point-to-multipoint transmissions and is geared to consumer applications. With the latter, equipment vendors and carriers have rolled out networks for the former while the latter has been inching along to early limited deployments.
Sprint has been at the forefront of WiMax deployments in the United States. The carrier announced that its services will debut in Baltimore this fall, and Chicago and Washington, D.C., also will come online before the end of the year. The company estimates the wireless data service will deliver 2M bps to 4M bps of bandwidth to each user. The carrier plans to use its WiMax backbone to support wireless services for small and midsize businesses.
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The modest rollout plans underscore the scaling back that Sprint and other WiMax supporters have undertaken. The carrier had been promoting the technology as the linchpin of its 4G plans. However, its implementation plans have fallen behind schedule by more than a year, with the company initially touting a soft launch of the service by the end of 2007, a commercial launch in April 2008, and plans to expand coverage to 100 million individuals by the end of 2008.
Those grandiose plans have been rewritten for several reasons. Availability of carrier and end-user equipment has been slow take shape and is just now starting to become more common. By the end of this year, customers will be able to find WiMax chipsets in PC cards, laptops, and ultramobile PCs. In 2009, WiMax will gain dual Wi-Fi functionality and will be embedded in various Windows CE devices, portable media players, personal navigation devices, and mobile Internet devices. Finally, by 2010 WiMax will include Wi-Fi and GPS functionality and will be installed in handsets and cell phones.
Sprint's technical, financial, and managerial missteps also caused delays. The biggest problem has been its diminishing market position. The expected benefits coming from its merger with Nextel were slow to arrive, and the company has been losing customers, mainly to Verizon and AT&T, which have solidified their market positions as the industry's two top suppliers.
Consequently, Sprint's financial position has been skittish. In response, the carrier has undergone a series of management changes, resulting in the departure of CEO Gary Foresee. Also because Wall Street was not enamored with the $2 billion that Sprint had planned to pump into its WiMax plans, the carrier has scaled back its plans dramatically to improve the bottom line.
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Such changes make it difficult for carriers and vendors to work out the kinks with this emerging networking alternative. While new products work flawlessly in vendor development labs, they often do not fare as well on live networks. Typically, wireless systems are more susceptible to interference and more difficult to manage than wired alternatives. So WiMax needs a lot of field-testing before it will be able to support hundreds -- let alone thousands or millions -- of customers.
Also WiMax was designed before vendors figured out how to improve Wi-Fi transmissions, so they operate over wide area network links. Not only has that work been completed but also vendors boosted Wi-Fi's transmission speed to more than 100 Mbps. It seems like a simpler, less expensive, and more familiar option than WiMax. Currently, the only advantage that WiMax has in this case is its ability to transmit information in 30 square miles compared with the thousands of square feet that work with Wi-Fi. This would help in rural areas but would not have much of an impact in congested areas.
Because it bet so heavily on WiMax's future, Sprint needs to be aggressive with its deployments. Unlike other wireless service plans, its customers will have the freedom to buy devices on their own and won't be locked in Sprint mandated systems. Also instead of multiyear deals, small and midsize businesses will have monthly service contracts that could be renewed or canceled at their whim.
This aggressive marketing is designed to lure customers away from other options, such as cellular data services, DSL, or T1 services. However, this approach may be dangerous because churn has been a constant problem for cellular carriers. Sprint could find itself losing as many customers as it attracts each month. Desperate times sometimes call for desperate measures. A few years ago, Sprint bet heavily on WiMax, but at this juncture, it looks like the company rolled snake eyes, which may significant ramifications for the future of both WiMax and Sprint.
See more columns by Paul Korzeniowski.
Paul Korzeniowski is a Sudbury, Mass.-based freelance writer who has been writing about networking issues for two decades. His work has appeared in Business 2.0, Entrepreneur, Investor's Business Daily, Newsweek, and InformationWeek.
