Is The Timing Right for WiMax?
KIRKLAND, Wash. -- Timing in the extremely capital intensive telecommunications industry can make or break a company. For WiMax carrier Clearwire, their timing is both really good and really bad.
It's good in that the broadband wireless service operator sealed its merger agreement with Sprint Nextel last May, before the financial market downturn accelerated to crisis mode in the last month. The merger, which the FCC said yesterday will be voted on at its Nov. 4 meeting, is part of a complicated partnership that also includes chip maker Intel, search giant Google, and cable operators Comcast, Time Warner and BrightHouse.
"We're exceptionally fortunate to strike our deal in May and these are good, high-quality partners," said Clearwire's chief executive Ben Wolff in an interview earlier this week.
The 39-year-old Wolff, who will retain his position as CEO of the merged Clearwire and Sprint company, talked about the tough timing of deploying a network from scratch with a scant array of devices available for the network today.
Consumer sentiment has worsened with the financial markets in turmoil; retailers say customers are tightening their belts as fear of a prolonged recession grows.
Many telecommunications services tend to avoid major downturns during tough times. People typically continue to watch their cable television, surf the Web, and keep their mobile services even in economic doledrums, according to analysts.
But for Clearwire and Xohm, which are just beginning to launch their nationwide deployment of wireless broadband service, there remains the question of whether consumers will buy new services and devices when their cities become WiMax centers.
Analysts like Roger Entner of Nielson IAG question the adoption of WiMax with scant devices and little momentum to quickly bring more devices into the marketplace. Sprint's Xohm launched its first market, Baltimore, earlier in the month with no handheld devices to offer customers signing up for the service.
In a conversation with Wolff earlier this week at the company's headquarters in Kirkland with views of Lake Washington, he said the strategy is to appeal to tightened budgets with lower costs for Internet services.
As for approval of their merger, Wolff doesn't expect much resistance from the five-member FCC. Chairman Kevin J. Martin has expressed his support for the merger, talking up the potential of WiMax to bring more competition to the wireless industry. Republican Commissioner Robert McDowell said on a recent visit to The Post that WiMax can help bridge the digitial divide of urban and rural areas as a lower-cost alternative to the biggest wireless carriers who don't deliver service in some remote areas.
"This will make the U.S. more competitive with speed and quality, and it's not a secret the U.S. has been lagging behind other nations with our broadband deployment," Wolff said.
October 16, 2008; 10:18 AM ET
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Posted by: June | October 18, 2008 11:59 AM
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