WiMax on the ropes?

Here's a commentary piece I wrote for CommsDay Asean last week, shortly after Sprint Nextel CEO Gary Forsee resigned. Over the past 12 months I've heard so many WiMax vendors suggest the fact that Sprint is rolling out a massive 802.16e network meant that the economies of scale for the technology were guaranteed. But what if Sprint changes its plans?
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When Sprint Nextel CEO Gary Forsee abruptly resigned earlier this week, he probably expected the speculation on his future and the future of the company that he had helmed for the past four years. It's unknown, however, if he expected the questions regarding the very future of the WiMax technology he has helped hype for the past 12 months.

Yet that is the biggest story to arise since Forsee left the office on Monday afternoon: whether there is any future in WiMax without a tier one operator to champion it. Not that Sprint has necessarily dumped WiMax, but most commentators and analysts are now seriously questioning whether the wireless operator will proceed down the WiMax route.

At best, most expect Sprint to slowdown its WiMax activity, which could equally be detrimental to the future of the technology, as Bear Stearns equity research analyst Philip Cusick pointed out in a note to investors. "We believe that Sprint is likely to de-emphasise the WiMax business, which could result in a slower rollout for WiMax in the U.S., lower economies of scale for Clearwire and shrink the ecosystem necessary to attract consumer electronics companies to WiMax," Cusick wrote.

That's quite a damning summation, but it's not the only negative sentiment nor the worst. Patrick Comack, a senior equity analyst with Zachary Investment Research, was quoted by the Washington Post as suggesting the company was negligent in going with WiMax in the first place. "The fact that they bought a $5 billion network without testing it was a violation of fiduciary duty. It's like buying a $5 billion car without test-driving it first," he said.

A similar sentiment was expressed to CommsDay this week by Gartner VP of technology and service provider research Martin Gutberlet, who pointed out that the WiMax technology that Sprint is deploying, 802.16e, commonly known as mobile WiMax, had not even started compliance testing yet. And it is widely known that the network had many technical setbacks.

Aside from a few niche fixed WiMax deployments in emerging markets, Gutberlet all but wrote off WiMax's chances against 3G and 4G technologies such as HSPA and LTE. He said that a new version of WiMax, 802.16m, had more potential but only if it wasn't hobbled by being made backwards-compatible. As this was unlikely to occur, he suggested that WiMax will never make it as a mass market technology.

Even the fact that the likes of Intel was pouring money into WiMax and supposedly making it standard in every new notebook in 2008 did not convince him that WiMax would become mainstream. As Gutberlet noted, Intel has got it wrong before. And it could also be that Sprint has got it wrong, too.

Given that the WiMax camp has put so much emphasis on Sprint rolling out the technology, it's fair to say that if they do indeed scale back their WiMax plans, the technology's future doesn't look anywhere near as bright as it did in the Gary Forsee era. -- Geoff Long