With new, telecom-savvy leadership and capital to spend, Clearwire is positioned to expand WiMax nationwide. But that doesn't mean SMBs should look to WiMax for wireless broadband service.
New technologies often have long gestation periods. For the past few years, WiMax technology has been touted as a potential way to deliver low-cost, high-speed network access to small and midsize businesses. While the jury is still out on its long-term impact, WiMax has reached a point where it's either going to fly or flop.
The specification, which falls under the IEEE 802.16 standard, 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 business and consumer applications. Proponents have focused on building out their networks to support the second application and positioned the networking technology as an alternative to other broadband options, such as cable modems, Wi-Fi, and DSL.
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Initially, Sprint was one of WiMax's biggest backers. The company planned a soft launch of WiMax services by the end of 2007, a commercial launch in April of 2008, and expansion to 100 million individuals by the end of 2008. However, the carrier's financial position became sketchy, and the company underwent a series of management changes, including the abrupt departure of CEO Gary Foresee. The company decided to cut back on its plans to pump $2 billion into its WiMax deployment.
Clearwire stepped in to fill the void and become the nation's WiMax flag bearer. Wireless pioneer Craig McCaw, who has played a key role in companies such as Nextel and AT&T Wireless, has served as chairman of the startup company. Clearwire has worked with partners to roll out services in Portland, Ore., and Baltimore and plans to expand to Atlanta; Charlotte, N.C.; Chicago; Dallas/Fort Worth; Honolulu; Las Vegas; Philadelphia; and Seattle in 2009. With these new metro areas not yet online, the company shook up its management hierarchy. Co-founder and CEO Benjamin Wolf, who will remain with the company as co-chairman, has been replaced by William Morrow.
Morrow's strengths seem to be in running the day-to-day operations of telecom companies. He was CEO of Vodafone, Europe; CEO of Vodafone UK; and president of Vodafone KK in Japan. In addition, he was president of Japan Telecom and also held senior executive positions with wireless telecom carrier AirTouch International. In 2006, Morrow joined Pacific Gas & Electric as president and CEO, but by the summer of 2008, he had left that position and stated a desire to get back to his roots: telecom companies.
Clearwire has raised $3.2 billion and plans to build out its WiMax network nationwide by December 2010. The company felt that it needed someone to manage the business on a daily basis as it goes through its network rollout.
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If Clearwire is successful, it would provide small and midsize businesses with one more wireless WAN option. Because of its design, WiMax (at least theoretically) would be less expensive to deploy and offer more bandwidth than the alternatives. In Baltimore, Sprint is delivering 2 Mbps to 4 Mbps of data bandwidth for as little as $25 a month.
However, theory may not translate to reality. WiMax was designed at the turn of the millennium when there were very few wireless broadband networking options. Partly because of its slow rollout and partly because of the success of other wireless alternatives, it now faces much stronger competition.
Cellular carriers have moved to embrace data networking technologies. Companies such as AT&T and Verizon are now investing billions of dollars to make it easier for their networks to deliver multiple megabytes of WAN capacity. This option works with the hundreds of millions of cell phones now in use in the United States.
Wi-Fi has been moving from a LAN to a WAN technology. Vendors boosted this networking option's top transmission speed to more than 100 Mbps. It seems like a simpler, less expensive, and more familiar option than WiMax. Currently, the main 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.
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The bottom line is WiMax has reached an important crossroad. With Morrow taking the helm, Clearwire has (at least theoretically) the money and the management team needed to deliver broadband, wireless services to small and midsize businesses across the United States. The coming months will serve as a critical test for whether or not the carrier can complete the necessary work. At this stage, its success or failure is unclear.
Consequently, small and midsize businesses will be taking a risk by signing up for WiMax services. A year from now, it should be clearer whether or not Clearwire has made the right moves and whether or not WiMax represents a viable alternative to corporations in need of wireless broadband services. Until then, it remains buyer beware.
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.
