By Adlane Fellah, President and CEO - Maravedis
Contact the author at adlane@maravedis-bwa.com

Two weeks ago, I attended the Sprint Technology Summit. The event had an estimated 300 attendees, including industry analysts, Sprint employees, and Wall Street analysts. The day’s morning session consisted of briefings from Sprint top management on the most recent announcements and plans. The afternoon was organized into breakout sessions with live demos and short presentations.

Sprint revealed that its wireless broadband service will be marketed under the awkwardly named "XOHM" brand – pronounced "zome." Gary Forse, Sprint CEO, reminded the audience that Sprint’s choice on WiMAX occurred 1 year ago. He referred to the partnership with Clearwire as the creation of a “seamless” network that lowered CAPEX and OPEX by sharing the same platform and back office. Meanwhile, the partnership with Google aims at creating a mobile social networking and search platform.

Barry West, CTO, followed by explaining the term XOHM as referring to WiMAX removing the resistance to speed and mobility – “ohm” being the measure of resistance in physics. He commented on the downward trends in ARPU, wireline subscriptions, and narrowband services. In terms of spectrum holdings, Sprint indicated that it had 90 MHz in the top 85 markets and that the deal with Clearwire brings that figure to 120 MHz. West reiterated his belief that EVDO is optimized for voice and that WiMAX is believed to provide 10 times more throughput than EVDO.

An interesting chart depicted the merits of 2.5 GHz vs. 700 MHz in light of the upcoming auction. Although propagation in the 700 MHz band is recognized as superior, that band is said to allow less frequency reuse and be more subject to interference (because of the propagation), thus resulting in lower speeds.

West's comparison of 2.5 GHz to 700 MHz has appeared in recent articles. He is right on the issue of reuse: although at a given power level, 700 MHz signals travel farther and penetrate obstacles better, this results in more interference between adjacent sectors/cells and hinders sub-tier coverage in shadow areas. Higher frequencies are generally better at providing high bandwidth and worse at providing wide-area coverage. The effectiveness of the overall network depends on the business and deployment model. An extreme case for the efficiency of 700 MHz might be seen in Qualcomm's use of only 6 MHz of the 700 MHz band to deploy 9 channels (8 plus 1 channel used for clips and other purposes) of MediaFlow video. From a small number of satellite links and base stations, MediaFlo is able to blanket wide areas. This makes very good use of the long-range and high-penetration signal properties at 700 MHz. But what if you wanted to provide high-speed Internet access using that same 6 MHz channel? That would not be nearly enough spectrum to provide service in suburban/urban areas. On the other hand, if Sprint wanted to provide metro-scale 1-Mbps Internet access, it is forced to deploy several base stations in metro areas. That the shorter-range signals travel at 2.5 GHz is turned into a benefit because it allows higher reuse.

Is West wrong? No, but like everyone else, he is biased by his own situation. Sprint naturally sees it necessary to downplay 700 MHz. But like competition between WiMAX and 3G, it will appeal to different sets of applications and customer preferences.

In terms of ecosystem, one of the big announcements last week was the commitment of Sprint partners that they will embed 50 million units by 2010 in the US. These will be mainly laptops and PDAs. Sprint alluded that it expects chipset cost to go down to $5-$15. This figure looks aggressive to me in light of the promised volumes.

Sprint wants to eliminate subsidy and create an “open network.” It wants to encourage manufacturers’ own branding to sell in retail stores anywhere. As long as the device is WiMAX certified, it will work on Sprint’s network after provisioning. Sprint wants to sell services, not devices.

WiMAX growth potential by 2010 is estimated at 130 million consumer devices, 125 million customers, 48 million households, and 4.5 million SOHOs. Those numbers do not include Clearwire markets. To say the least, these numbers are very aggressive and optimistic, considering that the window for deployment by 2010 provides only three years to deploy, solve issues, and find the right marketing mix.

Sprint expects $2-2.5 billion in revenue by 2010, of which 80% comes from new revenue and 20% is from cannibalization. Assuming an ARPU of $30 per month ($360/year), that means 6.2 million subscribers by 2010, which is not unrealistic. I am not sure if those revenues are accumulated or yearly.

The breakout sessions provided a showcase of the existing ecosystem: Zyxel, Samsung, Nokia, and Motorola were very much present. There were many cool devices, mainly WiBro stuff modified to fit Sprint’s spectrum. PCMCIA, dongles, vehicle devices, and all the stuff described in our consumer electronics report were displayed. It was encouraging to see these products, even within a controlled environment.

Conclusions

Overall, this was a good show, with the announcement of the WiMAX branding and other services. No hard data were made available to us for obvious reasons, and many questions remain to be answered such as future service pricing and marketing strategy. Sprint is trying to make the case for itself and for WiMAX at the same time. WiMAX is the big differentiator it hopes will stem its fall in the US wireless market. So Sprint has a lot to lose and to gain with WiMAX and will continue to advocate its merits. I am not sure Sprint has the $5 billion to invest overall to reach 125 million customers. I think the company will commit to the initial $2.5 billion and will need to get results fast or endure the fury of Wall Street. Time is of the essence for Sprint. AT4 Wireless (cetecom) test lab was brought to their facilities to ensure interoperability will happen on time. 2008 will be critical for Sprint to showcase its network going live. Sprint has been under pressure by the financial industry for falling profits, which is impacted by new services from Verizon and others and outlays for WiMAX deployments ahead of revenue.

For more information you can contact the author. adlane@maravedis-bwa.com