Sidecut Reports

There’s a pretty funny picture in today’s TechCrunch post about the explosive potential of the proposed Comcast-Sprint WiMax deal, but the analysis from Erick Schonfeld does’t really make the dynamite go boom. (Of course, any post that starts out by saying “WiMax is going nowhere fast” is probably not going to be long on thorough analysis; usually we see more-balanced stuff from Erick.)

If you’ve read any posts here you’re aware that I am working on a long report on WiMax deployments in the U.S. — have delayed its release a bit while this whole Xohm thing shakes out. But in the course of lots of interviews and general research, it’s clear to me that WiMax isn’t going nowhere, but instead is more likely to emerge for real this year, starting with the Xohm launches in Chicago, Baltimore and D.C., as well as other cities before the end of 2008. One source says there are already antennas and base stations being put up in places like New York and Boston; the real question is whether Sprint can fully fund the launch on its own, or whether it needs some friends (like Comcast or Intel) to help.

While there are certainly questions to be raised about WiMax, a quick rip job shouldn’t pass for analysis. It almost seems like Erick wants to cut WiMax some slack — he calls it promising and “early days,” which of course it is — but then he goes back to swipes, citing some statistics about a lot of money being spent with not much to show. But it seems to make sense that anyone launching a new network would spend a lot of money on towers, infrastructure, etc., well before the launch. So why dog Sprint for spending $577 million last year on capex and opex? If they hadn’t, wouldn’t they be even farther behind?

Erick’s last two points also fail to really explain the situation: When he claims that “WiMax is more an alternative to fixed broadband Internet access than it is to mobile phone service,” he is correct but not necessarily accurate — WiMax isn’t meant to be a cell-voice competitor, so why compare apples and oranges? Since we don’t know all the details (or if the deal is even real), it’s still a guess as to why Comcast might be interested. Maybe a video-device deal, like Amazon’s Kindle? But since WiMax is more about mobile data than voice (though VoIP should do well if WiMax works as advertised), saying cable shouldn’t be interested because it’s not cellular seems a weak argument. An alternative interest may be the “enemy of my enemy is my friend” idea — since cable companies can only get so big, maybe funding a WiMax play is a way to chip away at telco businesses in markets where Comcast has no presence.

As for Erick’s second point — “It no longer makes sense to try to own all the pipes because pipes are becoming a commodity” — I have to disagree wholeheartedly. Pipes may be a commodity, but they also throw off huge amounts of revenue, billions and billions that from any standpoint looks like a good business. Since WiMax (or other standards-based technologies) can benefit from Moore’s Law improvements and economies of scale, opex for WiMax nets should decrease over time — already in the past few years, CPE prices have come down from $500 to around $150, for example. Erick’s contention that the cable companies should let WiMax build on its own and then cut deals for distribution misses the idea that WiMax nets may be a good investment — does anyone see the need for bandwidth decreasing, ever? If a new pipe can get built, why not invest early when the return multiples are higher?

(If you want to receive an email when our WiMax report is ready, drop me a line; look for it soon after the Sprint announcements at CTIA next week.)

ADDENDUM: Our pal Andy Abramson said last year that cablecos are behind the curve when it comes to local wireless broadband (hat tip to Esme Vos for the link).

With yet another “people familiar with the talks” sourcing, the Wall Street Journal is nevertheless reporting that Comcast and Time Warner Cable are now the latest sugar daddies lining up to save WiMax from the not-so-successful clutches of Sprint and Clearwire.

We’ll skip most of the details because we have heard such reports from this same reputable outlet before, and they haven’t materialized. Past rumored bacon-savers Intel and Google reappear here, though in this report Comcast is purportedly the leading funder, to the tune of $1 billion. Google, which seems more interested lately in talking about wireless networks instead of actually spending money on them, is reported to be in with a few hundred million.

We’ll believe all this when we see it, which may indeed happen next week in Vegas where Sprint CEO Dan Hesse is scheduled to give a keynote at the CTIA wireless show. Stay tuned!

(Even though he probably shouldn’t be up late at night blogging, Om nevertheless put together a nice compilation of WiMax posts here.)

Good piece in Forbes today about why Best Buy wants to sell you your next cell phone. I know from personal experience that Best Buy is getting pretty good at having qualified staff on hand to answer questions about complex digital gear — TVs, PCs, cameras — so it makes sense that phones would be next.

The question is customer service, and who will do a better job — again from personal experience I would give the nod to Best Buy over the carrier-specific retail outlets. Maybe we will find out next week if the Nokia/WiMax tablet rumors are true, when Sprint CEO Dan Hesse gives a keynote speech at the CTIA show in Vegas. And then you can go to Best Buy to pick one up.

News is out today about the pricing of Intel’s Echo Peak combined Wi-Fi/WiMax silicon, at $43-$54 per chip, according to Digitimes. Good news if you are building a WiMax device, since prices should only go down from there.

In terms of finding out who might be shipping such devices, it looks like we will now have to wait until the CTIA show in Vegas in a couple weeks until we hear more about WiMax devices and Sprint’s Xohm launch plans. Sprint VP Ben Vos was here at the VON.x show in San Jose this week, but aside from a few statements about how WiMax will be used, all he would say about Xohm is “stay tuned.”

Allow me to add my condolences to the growing list of folks remembering blogger and journalist Russell Shaw, who passed away last week. For those of us who covered the sometimes arcane topics of telecommunications and public policy, Russell could always be counted on to not just stay on top of the news (often linking to other blogs without any ego), but to give his readers the type of analysis that moves the ball forward. Not as easy as it looks.

And while he was clearly on the side of innovation and openness, Russell didn’t pull any punches or stay silent when it came time to knock down silly ideas — here is just one post that shows clarity of thinking in the middle of an issue where it was easy to get lost in emotion. It will be a quieter news room at VON this week, with one less sane voice in the mix.