A promising wireless technology is resurfacing even though many in the industry have—for probably the hundredth time— given up on it. WiMAX, said a financial analyst who’s paid to look at such things, is far from dead, despite dire predictions about Sprint Nextel’s commitment and the nonchalance with which the cable industry apparently views its potential. Eric Kainer, a senior analyst for IP Communications with ThinkEquity Partners, even thinks Sprint’s comrade-in-WiMAX arms Clearwire should excel in 2008 if things align correctly.
“Because of the situation with the two license holders here— Sprint has 60-65 percent of the spectrum necessary and Clearwire has 35-40 percent of it—neither of these guys are tremendously financially well-capitalized powerful firms at this point,” Kainer concedes. “It’s going to take a little bit of dancing before they get this fully funded (but) once they get this funded these Clearwire guys are the smartest guys in the room.”
Money fuels everything in telecommunications, and WiMAX— under a number of different fixed broadband wireless names— has drained more than a few pockets over the years, leading to an acceptable amount of skittishness when it comes to taking yet another shot at the next generation of mobile wireless.
“The technology wasn’t quite ready,” Kainer insists. “People just got tired of hearing about WiMAX for so long ... and they begin to think it’s never going to happen. They’re making exactly the opposite mistake when it comes to LTE.”
LTE’s another next-gen subject. For now, Kainer’s touting the benefits of WiMAX and, in particular, mobile WiMAX and is unabashedly “high on Clearwire (as) the innovation platform for a network for years go come.” Sprint, he concedes, “is a work in progress” and both service providers need financial and technological partners.
“Clearwire already has a nice relationship that they’ve established with DISH (Networks) and DirecTV which hopefully ends up getting launched operationally this year,” he says. Sprint is loosely tied to the cable industry in a Pivot relationship that is seemingly going nowhere.
“They’ve basically pulled the plug on it. They haven’t killed it; they’ve just stopped marketing,” Kainer says.
That doesn’t mean that cable guys don’t value wireless. Despite straightforward guidance by Comcast boss Brian Roberts that his company won’t pursue a wireless track in 2008, Kainer believes it will. Again, he’s looking at things from a financial perspective and it wouldn’t make sense not to buy in when things are cheap.
“If you’re going to ever do wireless, you want to get your bets in when you can get the best return from them,” he says. “If Comcast doesn’t get in on WiMAX this year, they’re going to be paying much more money for a vastly inferior service than if they stepped up the bucks this year. Quite frankly, I don’t know that it’s an enormous amount of money they need to put in here.”
How much?
“Maybe they end up putting in $1 billion,” he says without a visible trace of irony. “If they’re ever going to have a mobile triple play to pair with their fixed triple play, this is the way to do it.”
The place to put that money is with Sprint Nextel and/or Clearwire since they hold the spectrum and have already started deploying WiMAX, Kainer believes. In fact, he thinks it’s possible that Sprint Nextel and Clearwire will resume the close dance they broke off last year.
“Can (Sprint) thrive without the cable guys? Can they thrive without partners? No, they can’t,” he says. “This is a very different world. When we start talking about the proliferation of services that need to transit multiple networks in order to go from subscriber to subscriber, everybody needs partners.”
Unless, of course, if they’re AT&T or Verizon and they already have all the parts they need.
“The trap here for AT&T and Verizon is to look and say ‘Look at how much better we are than pitiful little Sprint,’” he says. “Out of weakness can be born the seeds of strength and that’s exactly what I think can happen here.”