Opportunities and Challenges for Broadband Wireless and WiMAX in the USA, 1st Edition

The BWA/WiMAX conversation in the US market begins with Sprint. Sprint experienced struggles in its PCS business irrespective of its WiMAX initiatives. The hiring of Dan Hesse as CEO is intended to stem the tide of customer losses among its Nextel customer base. On the WiMAX front, the breakup of Sprint' s collaboration with Clearwire unsettled the whole industry. Sprint maintains it is committed to WiMAX. In fact, Sprint has moved forward with a soft launch of the Chicago, Washington DC, and Baltimore MD markets in December 2007. Despite . Sprint' s announcement last week that it would eliminate 4,000 jobs and close 125 company stores as part of a reduction of sales points, Maravedis believes that Sprint has the best mobile WiMAX opportunity and will proceed with its XOHM WiMAX play under three possible scenarios detailed in the report.

While our research indicates that Sprint and Clearwire have the best mobile WiMAX agenda, they have been by no means the only carriers investing in WiMAX in the US.

Carriers feel that expansion into specialized niches, especially business-to-business sales coupled with strong service models, integrated back-office systems, and additional service bundles, provide a powerful enough proposition to customers to succeed even with fixed/portable wireless plays.

The conventional wisdom has been that the opportunity for exploiting WiMAX and broadband wireless access (BWA) was exclusive to two companies: Sprint Nextel and Clearwire. In terms of mobile WiMAX, these carriers do have the best opportunity. However, WiMAX as a whole appears to offer ample opportunity for additional carriers and their investors. In this report, we profiled more than 23 carriers, vendors, spectrum holders, and industry stakeholders to ascertain, primarily from the carrier point of view, opportunities, realities, and threats.

Top Key Findings

• Maravedis believes that Sprint has the best mobile WiMAX opportunity and will proceed with its XOHM WiMAX play under three possible scenarios:
  • Scenario 1: A slower build-out tempo than previously announced and a more modest CAPEX investment in 2008 and until Sprint consolidates its position in the mobile play. Sprint would make modest investments on the infrastructure side and focus on the development of a proper device ecosystem until fully certified equipment is available.
  • Scenario 2: Sprint spins off its WiMAX unit under a new entity, where external investors such as Intel and possibly Samsung/Motorola become dominant investors. Sprint would retain full control of the very valuable BRS spectrum. A partnership with Clearwire would also be revisited.
  • Scenario 3: Sprint continues to develop WiMAX deployments in 20-40 MHz of its 90 MHz of available 2.5 GHz spectrum for WBB connectivity. Sprint then deploys LTE as a fully mobile service. WiMAX and LTE converge in multi-mode portable devices and embedded applications. Sprint lets the market decide which technology to deploy and to what extent their two markets converge.
• WISPs using both licensed and unlicensed bands will continue to deploy BWA and WIMAX equipment. Notable WISPs interviewed indicate that there exists a clear opportunity for WiMAX outside Sprint.
• Opportunities for WiMAX and BWA in the 700 MHz bands are real but will not start materializing until at least 2010.
• A fixed and/or portable differentiation play with a strong service model, integrated backoffice technologies, and additional services is a powerful enough proposition to bring to market.
• Non-Sprint WiMAX subscribers will exceed 10 million by 2012, up from a half-million at the end of 2007.
• The current regulatory environment in the U.S.- along with strong representation from industry and standards groups- is providing a robust pro-broadband wireless framework.
• LTE will be the dominant broadband wireless access technology in 2012.
• Service providers are seeking to differentiate into niches. There is particular emphasis upon business-to-business services in the next three years.
• Many of the firms surveyed are products of consolidation and are increasingly interested in additional consolidation.