Sidecut Reports

After a week of all 3G iPhone all the time, it’s pretty clear that the performance hurdle is being set for the “new” Clearwire and its planned nationwide WiMax network: Devices will need to look and perform reasonably like an iPhone, at as-fast or faster speeds, for lower prices, to get any traction at all. Luckily for Clearwire and its partners, those barriers aren’t insurmountable, but there’s also not a lot of time or chances to get things right. As we say in our most recent revision of our WiMax report, it’s still Game On, WiMax. But Clearwire better hurry, before Apple and AT&T run the table.

On the device look-and-feel front, it seems like Clearwire should be safe — WiMax partner Samsung is already showing a touchscreen iPhoneClone, and Google’s Android interface looks sufficiently iPhone-enough to compete, should it arrive as scheduled. On the speeds front, Clearwire should be able to make the 3G iPhone look pokey, if the company actually delivers its promised speeds of between 2 and 6 Mbps on the download side. Since Clearwire claims in its official merger filing with the FCC that its networks will support mobile two-way video, it appears that the folks on the networking side are pretty confident. That leaves us with pricing plans as the place where Clearwire might stumble in its bid to unseat the iPhone.

With an upfront cost of $199 and monthly plans of $60-70 for voice and data, the 3G iPhone isn’t cheap, so Clearwire seems to have some breathing room, especially since Clearwire service plans are likely to include a bundle of home and mobile Internet service for the same customer. But since Clearwire doesn’t plan to subsidize device costs, it will have to do a lot of marketing to convince customers that it may be cheaper in the long run to buy a more-expensive device and pay less per month; it will then have to turn around and sell an opposite story to Wall Street, claiming it can make more in revenues by signing more customers to cheaper contracts, including those for ad hoc or daily use.

Hmmm.

Clearwire may get an additional break or boost if AT&T and Apple run into network congestion problems following the July 11 availability date for the 3G iPhone. (Wonder if we can get odds on the downtime next week at NXTcomm in Vegas?) Ideally, Clearwire would start some limited public tests as soon as possible to give users a taste of what a 4G device could look and feel like. Until then, all we’re likely to hear is how much the fanboys love their 3G iPhones. The louder that chorus gets, the harder it will be for Clearwire’s song to be heard.

Need to know more about WiMax? Order our recently updated WiMax report, with full analysis of the “new” Clearwire deal and the motivations for investors Comcast, Google, Intel and others.

Good stuff from our friend Drew Clark on the ongoing white spaces spectrum battles, which heated up recently in D.C. after Google’s Larry Page weighed in on the matter.

Drew drills way down for all the details, the politics and a sidebar on spectrum math. Good reading if you are interested at all in finding more bandwidth for broadband.

It’s good to see that AT&T, as we predicted in our recent WiMax report, has responded quickly to 4G challengers by stepping up the hype on their own planned offerings. At an analyst conference Wednesday, AT&T said its 3G data network could reach download speeds of 20 Mbps by 2009, according to a report from AppleInsider.

The report quotes Ralph de la Vega, AT&T Wireless President and CEO, telling attendees at a Morgan Stanley communications conference that AT&T engineers already have a HSPA (High Speed Packet Access) 3G network running in their labs, at speeds of 7.2 megabits per second (which is about double of AT&T’s wireless network capability today). The report adds that “AT&T plans to transition to HSPA release 7 sometime in 2009, which will deliver even bigger speeds “exceeding 20 megabits per second,” according to the executive.”

While AppleInsider quotes de la Vega as saying the upgrades will require “few if any hardware modifications to the company’s infrastructure,” there has been widespread questioning of late whether or not network providers have sufficient backhaul to supply the wireless-data demands. Of course, since this is theoretical at this point de la Vega doesn’t actually have to deliver the bits today. But the hype, clearly, will arrive as scheduled.

Good stuff from pal Andy Abramson about what the new Clearwire might do differently, instead of just acting like another DSL or mobile-phone option: Go deep with video, says Andy:

Instead of simply being another voice play to battle Skype or the mobile operators, the WiMax companies and the cable operators, and heck, even Ma Telco may all may find that they may be better off looking in another direction. That direction is real-time video communications bundled up along with other IP related services like voice and text, all in one neat little package.

There’s lots of meat to dig into here, including conjecture about how Skype has changed the game of communications forever, and why video and rich communications matter. So read the post. It’s worth your time.

As of this writing, we are projecting four Sidecut Reports will be completed in this calendar year, with the first one, “Xohm or Go Home: Why 2008 Is WiMax’s Breakout Year in the U.S. — Or Else!” all ready for your credit card on our ordering page.

The WiMax report is the first in our “Wireless Broadband” coverage category. For the purchase price of $149.95, you not only get the full report PDF, you also get a yearly subscription for report updates and news flashes on that topic area for the full calendar year.

Reports will be issued in the following categories as they are completed:

PUBLIC POLICY — Report on “Network Neutrality,” due out by early June, 2008.

INTERNET VIDEO INFRASTRUCTURE — Report due out late Q2 2008.

ADVANCED TELEPHONY — Report due out Q3 2008.

For editorial calendar information or report structure, send me an email to kaps at sidecutreports.com.

Whatever the reasons behind it, Sprint’s decision to offer exactly zero hard infomation about its Xohm WiMax launch at CTIA was one of the biggest losing hands in Vegas this week. Not only did the company’s strange silent stance produce confusion and grumbling in partners’ booths, it has lit a WiMax-failed-hype meme that won’t do Sprint any marketing favors when it tries to launch the new wireless network later this year.

While I’m not as pessimistic as some (like Stacy over at GigaOM) about WiMax’s eventual place in the broadband-services world, there wasn’t a lot of confidence instilled by Sprint’s unwillingness to commit to any specifics about a service that the company still claims to be on track for a Q2 launch in Chicago, Baltimore and Washington, D.C. (UPDATE: According to other reports, Sprint is now saying the launch will be “later this year.” Just more confusion showing how muddled the message was this week.)

The CTIA event was a perfect platform for Sprint to spread the word — hundreds of telecom-centric scribes filled the press room, snarfing down stinky barbecue sandwiches while waiting, perhaps hoping to write about something other than another iPhone clone.

But instead of tackling the rumors head on — or at least addressing the fiscal problems that make stories about the need for a WiMax white knight sound credible — Sprint CEO Dan Hesse whiffed during his keynote, talking only about how great WiMax is before sprinting to a meeting room, with no press Q&A and nothing more than a “coming soon” slide to serve as the big Xohm news of the day. Poor Xohm President Barry West then had to spend the better part of Tuesday and Wednesday fending off increasingly aggressive questions about launch dates, investments and partnerships. A Tuesday evening Xohm press reception got off to a chilly start when West ended his welcoming remarks with a bit of a snarly warning about not asking questions he couldn’t answer.

(So of course we waited all of 10 seconds to ask him when the partnership would be announced. Graciously, West did continue to answer questions he could answer, such as one about what was causing the biggest delays — “Backhaul,” West said, claiming it was hard to find enough tech types with microwave experience to quickly set up tower sites.)

After WiMax took a few lumps from Vodaphone CEO Arun Sarin — who said during his Wednesday keynote that LTE should be the unifying 4G standard — West came out swinging during an afternoon Xohm update, saying he agreed there should be one 4G wireless standard — “but why bother with a standard [LTE] that isn’t finished? Let’s go with WiMax,” he said, gettting a laugh from the audience.

Then responding to a question about whether or not Sprint had the resources to go it alone on Xohm, West said: “Is [Sprint] healthy enough? Yeah, you bet it is.”

But if that is true, then why didn’t Hesse say that up front? Even if there are some advanced negotiations that prompted the impromptu news freeze, a bold bluff couldn’t hurt any more than the confusing appearance of lots of Xohm sizzle (snappy black outfits, a sizeable show-floor booth, lots of branding, some TV ad previews) without any steak to back it all up. Attendees from Xohm hardware partners and even some black-clad Xohm workerbees grumbled or shook their heads, wondering why there was no big announcement to match the buildup.

Maybe we’ll hear more soon, maybe not. But for WiMax backers, there weren’t a lot of smiles in Vegas this week, despite new products like Nokia’s WiMax tablet. In a briefing Wednesday with Motorola senior vice president Fred Wright (one of the leaders of Moto’s WiMax ship), Wright told us there was a “lot of momentum” behind Sprint and Clearwire, but later in the interview some frustration surfaced.

“Clearly, [Xohm] is very important to us,” Wright said. “But it isn’t going to make or break our WiMax business.”

Ouch!

It doesn’t count as a full review, but I did take the Nokia WiMax tablet out for a short test drive on the CTIA show floor Tuesday — and I can attest that the thing does work, the screen looks nice, and if your thumbs are fat like mine you might not like the keyboard, since it is set a bit close to the bottom of the screen.

Still no word from the Sprint folks on when the Xohm WiMax network will go live, or what pricing plans would be. (Barry West, the company’s WiMax tech lead, said “don’t even ask that question” at a press reception Tuesday evening.)

But Hey, Look! Sidecut Reports via WiMax to the Nokia Handset!

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.