Sidecut Reports

It was sort of a perfect storm of WiMax information Monday, as an Intel Centrino2 briefing followed our personal interview with Clearwire CEO Ben Wolff, the latter for an update on the progress of the new Clearwire national WiMax network. While it will take a day or two for us to process all the info from our call with Ben Wolff (we are still not up to Centrino speed around here), there were some nuggets from both interactions that are worthwhile to note:

Intel’s WiMax silicon is still not available. As the company has stated before, on Monday it reiterated that its dual Wi-Fi/WiMax silicon for notebooks will not be available to notebook OEMs until sometime in the second half of 2008. While Intel PR folks did confirm that the company’s promised reference design of a WiMax PC Card is now available to device manufacturers, the board-level silicon gap means that there won’t be WiMax-enabled PCs ready to ship when the first WiMax networks come online in the U.S. this fall. Is this a major problem? Probably not, since there won’t be much in the way of WiMax networks available until later in 2009 anyway. But it’s not a positive development, either.

Clearwire and Sprint must still operate separately until the “new” Clearwire deal closes in Q4. This has always been a somewhat murky question, but Clearwire CEO Wolff cleared it up — Clearwire will not have access to any of the new investment capital and cannot coordinate ongoing activities with Sprint until after the deal passes DOJ, FCC and shareholder approval. That means that for 2008, the “old” Clearwire will be looking to launch Mobile WiMax in Portland, Ore., while Sprint will keep its Xohm name around until at least January, with a September launch in Baltimore and later launches in Chicago and Washington, D.C.

Sprint’s Xohm network is on schedule for September launch in Baltimore. Sprint Xohm guru Barry West was on stage at the Intel event Monday, and said the network will launch “between [September] 1st and the 30th,” and will have 150 cell sites offering “in-building coverage as well” in downtown Baltimore. “Despite what you’ve heard, WiMax is alive and well” and will launch in Baltimore, Chicago and Washington, D.C., West said.

Clearwire is already beta testing its Mobile WiMax network in Portland, Ore., and is pointing to a commercial “soft” launch by “early Q4.” “We’ve already started loading customers on the network in Portland,” said Wolff, who hopes to have a commercial “soft” launch by “early fourth quarter.” Clearwire will then take its learning experiences from Portland to its next scheduled launches, in Atlanta, Las Vegas and Grand Rapids, Mich. (ed. note: Better get that Vegas network ready by CES!) All Clearwire’s launches going forward will be Mobile WiMax, Wolff said. More on Clearwire from Ben Wolff in the next day or so! Promise!

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.

Without having seen any full report, it’s perhaps not fair to take a shot at the analysts at Frost & Sullivan for having what looks like some weak takes on the WiMax market. But there are certainly some questions folks should be asking about the press release put out Wednesday by F&S that all but predicts Mobile WiMax’s death before the technology’s even out of the cradle.

Since we have just completed a rather thorough look at the U.S. WiMax market ourselves, we are wondering why the F&S press release got such wide play across the techno-newsosphere without too much questioning along the way. (At least our good pal Loring Wirbel over at EE Times did find some time to wonder if there was another viewpoint on the matter, and kudos to dailywireless.org for poking some holes.) Actually, we’re not wondering why the release got so much play, and we’ll explain why later. But first some questions for Frost & Sullivan “Programme Manager” Luke Thomas, who is quoted at length in the release as being the guy ready to stick a knife in WiMax:

1. Why do you think it makes sense to compare WiMax to Wi-Fi as an operator choice for metro networks? When you say that “In terms of indoor wireless broadband, Wi-Fi fits well in this space and with the emergence of 802.11n, which includes MIMO, throughputs would be far better than what Mobile WiMAX can deliver,” are you proposing that service providers will install wireless access points in buildings all across metro areas, providing for broadband backhaul to each spot, and then guarantee service in the unlicensed bands that Wi-Fi operates in? And that this is a better metro delivery choice than licensed-spectrum WiMax?

2. In terms of handing off to cellular networks when WiMax coverage isn’t complete, you argue that “With respect to outdoor mobile broadband environments, users would expect Mobile WiMAX to seamlessly hand off to cellular networks in the absence of WiMAX reception. In reality this is not possible as Mobile WiMAX is not backward compatible with existing cellular technologies.” Hmm, then why is Sprint already talking about a combined WiMax/3G phone (due out Q4)?

3. When you say that “any operator looking at Mobile WiMAX has to consider the current environment in which 97% of laptops are shipped with Wi-Fi technology,” are you at all aware that Intel — WiMax’s biggest backer and supplier of many core chips to those same laptops — will essentially be giving away WiMax connectivity with its planned WiMax/Wi-Fi chipset due out later this year? What do you say to operators when those chips start shipping?

4. Do you really believe the LTE assertions in your press release, which state: “LTE is expected to be a fully ratified standard by the end of 2008 or beginning of 2009 with deployments slated to occur in late 2009 or first months of 2010 offering peak data rates of up to 170Mbps.” And can we bet a pint or two on whether or not there is an operational, commercial 170 Mbps LTE network running by 2010? (You can guess which side of the wager we might take.)

To be fair, the Frost & Sullivan press release did state that “the work carried out on Mobile WiMAX has the potential to spur new ventures, which could potentially lead Mobile WiMAX to merge with 3G LTE.” But this info was in the second paragraph, buried beneath the linkbait headline of “Mobile WiMAX on the Way Out?” and the lead-graf conclusion that “the technology is facing a range of challenges that are likely to make it unfeasible as a mobile ‘access’ technology.”

In this day of short tech staffs and the pressure on bloggers and reporters to blindly turn copy around, it’s no surprise that such a powerful take from a known entity like F&S would be quickly turned into a Analysts Predict WiMax Death post or report. While some of the challenges F&S assert are certainly hurdles WiMax needs to overcome, the incompleteness and oranges-to-apples comparisons noted by our questions above should have raised more red flags than it apparently has.

(We do have a request in to Frost & Sullivan to see any full WiMax reports they have written; more as we hear more from them. UPDATE: Well, we did get to read through the full “report” from Frost & Sullivan, and it’s not much more than the press release and only raises more questions than it answers — for instance, why does the report not talk about the May 7 “new” Clearwire deal but instead state as fact that Sprint has “terminated its partnership with Clearwire”? Sounds like recycled hash to me. In the meantime, if you would like a 37-page deep look at the state of the WiMax market in the U.S., with complete analysis of the “new” Clearwire deal (based on real interviews and not outdated opinion), please order our report, available for instant download.)

According to Don Clark of the Wall Street Journal, Monday’s big WiMax announcement is going to be about a “patent pool” spearheaded by Cisco, Intel, Samsung and others, aimed at reducing the amounts developers (especially device developers) might have to pay for WiMax-related patents.

For Clearwire, Sprint and other service providers, having a group with Cisco and Alcatel/Lucent in it can’t hurt, since both those companies can probably bring big patent portfolios to bear. But until the real heavyweights of the wireless world sign up — as Clark notes in his story, neither Qualcomm nor Motorola is part of Monday’s pool party — the patent pool is somewhat on the shallow side.

Why is a patent pool important to WiMax’s development? While the “openness” of the planned Clearwire WiMax network may be attractive to independent device developers, the patent problem could be a bigger deterrent. Sure, it sounds great to think that you could build a device, and as long as it meets WiMax standards, you can sell it at Best Buy and customers could instantly connect to the Clearwire network. Sounds good.

But since that device isn’t subsidized or supported by Clearwire, don’t expect them to help out a lot should Qualcomm or say, Verizon’s lawyers come calling, asking for a piece of your profits should your device suddenly turn successful. Ask Jeff Citron how those battles end up.

Of course, Sprint is not shy when it comes to filing patent lawsuits, so at least the WiMax pool party will have someone around who knows how this game is played.

UPDATE: Cisco and Intel hosted a very disjointed press conference/webcast, with some speakers live in studio, some on the phone and some on webcast. Questions had to be submitted to a moderator, which meant that execs on the conference could dodge questions without complaint. (I asked the panel about what would happen if a non-alliance member sued an alliance member, and whether the alliance would help fight the lawsuit, and got a non-answer answer. Press release on the alliance is here on the Cisco site.)

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.

Is networking hardware giant Cisco ready to throw its hat a bit deeper into the U.S. WiMax market ring? Looks that way from the press conference invite that just landed in our in-box, inviting us to a webcast on Monday, June 9, that will discuss “a new initiative by industry leaders in mobility to stimulate more innovation and new entrants into the WiMAX ecosystem.” The roster of attendees includes Cisco, Clearwire, Alcatel-Lucent, Intel, Samsung and Sprint.

While Cisco and Alcatel-Lucent already have existing WiMax businesses — Cisco bought gear supplier startup Navini last fall, and AlcaLu is behind some smaller operations in the U.S. — both were significantly absent from any previous association with the old Clearwire, the old Sprint Xohm plan, or the new Clearwire WiMax announcements. Cisco CEO John Chambers has previously said that Navini was purchased with overseas customers in mind, but that may be changing due to the new ambitious plans of the new Clearwire and its deep-pocket investors Google and Comcast. Intel and Samsung are already neck-deep in Clearwire partnering, with Intel supplying $1.62 billion in investment cash and Samsung building network infrastructure along the East Coast.

Our best guess is that this new group is forming to do some sort of clearinghouse or testing/certification for Mobile WiMax back-end gear and devices, the kind of activity that is necessary to “stimulate innovation and new entrants” by making it easier to assure customers that it will all work together. More as we learn more!

It was interesting to read last week that one of the things that convinced Comcast CEO Brian Roberts of WiMax’s viability was a demonstration of how well mobile WiMax can work, even at 50 mph.

In a report last week from Light Reading’s cable guy Jeff Baumgartner, Roberts (whose company poured just north of a billion bucks into the New Clearwire WiMax deal) said “he became a believer partly due to a Clearwire WiMax demo that served up video as he and his test group zipped down the road at 50 miles per hour.”

While we’re not sure where Roberts’ demo took place (guessing Portland, Ore.), we were similarly impressed by the Motorola-Intel mobile WiMax demo at CES way back in January. From our most recent WiMax report, here is a small snippet about the WiMax drive-by (which one of our guest editors said should have been the first part of the report, because he liked the tale so much). Remember, you can order the report and get the whole story via immediate download. But here’s the excerpt, anyway:

When it comes to Internet use, watching a streaming YouTube video clip is a pretty mundane thing these days. But when you add in a significant degree of difficulty — say, watching YouTube without interruption inside a sport-utility vehicle driving around Las Vegas at 35 mph — then you start to realize the power and potential of Mobile WiMax in a very simple and understandable way.

The aforementioned experience was facilitated this past January by Intel and Motorola, who earned no small bit of publicity at the CES show by equipping a small fleet of SUVs with internal Internet connectivity powered by Mobile WiMax. The completely un-canned demo — reporters riding in the vehicles were allowed to use the connectivity in any fashion they desired on a range of devices — showed a high degree of confidence from Motorola and Intel that even a small, hastily constructed Mobile WiMax network would perform sufficiently well.

The report goes on to describe what you might find if you drove one of those trucks about an hour away… to a small town where a big telco is quietly running a commercial WiMax network of its own… if you want the details, you know where to find ‘em.

Sidecut Reports is pleased to announce the new, updated version of our WiMax report, which includes a comprehensive study of the “new” Clearwire WiMax deal and its $3.2 billion of investment from a group that includes Google, Comcast, Intel and Time Warner Cable.

Motivations behind the investments and the combination of WiMax assets from Sprint Nextel and Clearwire Corp. to form the “new” Clearwire are explored and explained in the revised edition of Sidecut’s previous in-depth look at the U.S. WiMax market, a report that all but predicted the inevitability of the deal announced May 7, 2008. In the new report readers will learn:

– The new opportunities and challenges for Clearwire’s national focus, which is a departure from previous plans

– The motivations for Google’s $500 million investment, which go beyond business goals for search and mobility to include public-policy goals

– Why the big telcos, AT&T and Verizon, may not see WiMax as a prime competitor (even as they step up marketing and lobbying efforts to make life harder for WiMax)

– Why cable providers like Comcast may be looking to WiMax to expand their user footprint beyond its current regulatory limits

The report also contains a WiMax technical and historical backgrounder, as well as an updated look at the WiMax business opportunities for enterprises, investors and entrepreneurs in markets including mobile Internet businesses, software development, and mobile device manufacturing. Titled “Game On, WiMax! Why the “new” Clearwire gives WiMax its best chance at success in the U.S. marketplace,” the new report is available for immediate download from our website.

Sidecut Reports, a new independent editorial research firm, all but predicted the blockbuster WiMax investment announcement in our original report, which came out a week before the historic agreement.

“Perhaps the new investors came to the same conclusions we did at the end of our initial report,” said Paul Kapustka, founder and editor of Sidecut Reports. “While there are significant challenges for starting any new network, the already-working nature of WiMax combined with the breadth of spectral and infrastructure assets of Sprint and Clearwire made investing in such a joint venture something close to an even-money bet.”

As we rework our recent WiMax report to include the details of last week’s game-changing announcement, it’s a good time to ask what comes next for the new Clearwire and its bigger, grander plans. After comparing the news to the research we did for our initial report, two changes stand out: First, the new Clearwire will get a bit more time to launch, given the complexities of the funding and the technical aspects of the new joint venture. But second, the company will have to meet more ambitious goals of nationwide coverage and roaming, features neither Sprint nor Clearwire had planned to offer in their early 4G WiMax iterations.

More after the jump, including some housekeeping details on when our revised WiMax report will be ready. (Hint: you can order the old one today, and get a new one free when it’s fully edited)

Read the rest of this entry »

A little bit of video fun, from September of 2006…

“Time will tell.”

With all the headline basics of the New Clearwire Deal fully digested, I took the time Thursday night to listen to the entire conference call from Wednesday morning, and came up with a bunch of interesting tidbits. A big one was CEO Ben Wolff’s declaration that the new Clearwire will not just go after consumers (which was both the Xohm and old Clearwire plan) but will also pursue SOHO, SMB and enterprise customers for its 4G wireless broadband service, using Sprint’s existing enterprise sales force to go after Fortune 1000 accounts.

This is either good or bad news for pure business-access WiMax player Towerstream, which now becomes a potential partner, competitor, or acquisition target. Since Towerstream CEO Jeff Thompson had hinted at the former during his interview for our recent WiMax report, that’s where I will guess first.

Other nuances buried in the call include:

– Most of the investors will actually contribute through some kind of LLC process whereby they can earn tax credits for the new Clearwire’s expected losses; only Google invested directly, which (and this is a guess) is what you can do when your stock is north of $500 per share. Guessing we will hear more about this when SEC document hounds get their teeth into the meat.

– Sprint will lease cell-tower space to the new Clearwire at a discounted rate “that is still above our cost,” according to Sprint CEO Dan Hesse. Since Sprint is a majority owner of the new Clearwire, isn’t that kind of like selling stuff to yourself? Talk about bottom-line gymnastics!

– Sprint’s Hesse said it that by the end of 2008, the company would have WiMax networks up that could reach 15 million potential customers; since the soft-launch markets of Chicago, Baltimore and Washington D.C. have a combined population of about 4 million, that means there’s work being done somewhere else (New York, Boston?) as well. Remember the old Clearwire had already planned 2008 launches in Portland, Ore., Las Vegas and Atlanta, so add those into the mix.

Clear(wire)ly, there’s a lot still to digest and we of course plan to incorporate all the details, as well as more analysis of winners, losers and opportunities in our ongoing coverage of the wireless broadband arena. If you are behind the knowledge-curve and want to get a jump-start on all things WiMax, just order our recent WiMax report, which covers everything leading up to Wednesday’s announcement, including a WiMax technology and history backgrounder, as well as deep-dive details on the economic advantages of WiMax and the potential new business opportunities. All past and new subscribers will of course receive any ongoing revised versions of the report, since a purchase at Sidecut isn’t just for one report but for a year of coverage.

The Wall Street Journal is confidently predicting that a consortium of tech companies including Google, Comcast and Intel will contribute $3.2 billion in seed money to back a WiMax consortium that will combine the WiMax assets of Sprint and Clearwire. This long-rumored investment makes sense from multiple angles, and was the core feature of our recent report, titled “Xohm Or Go Home: Why 2008 Is WiMax’s Breakout Year in the U.S. — Or Else!”

While the entity will apparently take Clearwire’s name (thankfully shedding Sprint’s awful “Xohm” moniker), it will make use of Sprint and Clearwire’s large holdings of 2.5 GHz spectrum to deliver fast broadband to a wide market. The lure for the investors, as we said in the report, is clear:

The potential upside of a large WiMax-based network is theoretically huge, especially if the key rumored partners of Comcast and Time Warner, or Google and Best Buy sign up to help with seed money, technology and marketing. While the need and desire for more forms of broadband access is already marketable today, the promise of true mobile broadband — a combination of Wi-Fi-type speeds and cellular-style reach — could open up markets for devices and applications that are only starting to arrive in forms like Apple’s popular iPhone.

Why would cable companies and Google want to invest in a wireless network? Over at GigaOM my pal Om thinks they are dealing from a position of fear. But they could also be looking for new ways to expand that put them out of the reach of FCC chairman Kevin Martin, no friend of the cablecos. Again, from our report, some more thinking:

For Comcast and Time Warner, a Xohm investment could be a positive in several ways — on one hand, it could give the cable providers a true “quadruple play,” with the ability to add wireless access to their current “triple play” offerings of voice, video and data. And since cable companies are currently restricted by law from growing too big (regulations say no provider can have more than 30 percent of the overall U.S. market), a WiMax investment in a standalone provider could be another way to gain indirect market share.

Our quick take is that this is a deal that makes too much sense not to happen, even with the big numbers and uncertain future ahead. Winners and losers that we see include:

Winners
Clearwire – Craig McCaw plays another winning spectrum hand into a cash-out deal, while the folks at the company now have the capital and marketing might to see if this thing really can work.
Intel – By “doubling down” its own investment, the chip giant has brought a bunch of deep-pocketed friends to the table to help advance its WiMax plan.
Motorola — Partnering with Intel and Clearwire early on now assures Moto of a steady stream of WiMax infrastructure sales.
Samsung — At the very least, Samsung is now assured that its POs for all that WiMax gear being put into place in New York and Boston will be paid for.
Comcast – Brian Roberts puts his money and deal-making sense in the same place to help build another tool to attack the phone companies with.

Losers
AT&T and Verizon — If $3.2 billion is all it took, why couldn’t the telcos have bought out Clearwire and Sprint? We should start running a tab right now on the advertising, lobbying and other persuasional spending that the telcos will burn trying to convince the public, the FCC and Congress that WiMax is bunk and everyone should wait for LTE.
Sprint – You can say that caving in got them some money for their grand WiMax plan, but there is a hint of desperation in the air surrounding the surrender of the Xohm name to Clearwire.

Stay tuned to this channel for more news and analysis as details of the deal flow out (according to the Journal announcements are expected as soon as Wednesday morning). To wrap it up, we’ll offer the final conclusion from our report:

If WiMax delivers on service providers’ plans of being cheap, easy and pervasive, then there are big opportunities today for venture investors, businesses, application and device developers, as well as infrastructure and service-provider players, who still have time to get in ahead of the mass-market adoption part of the curve. How high up that curve will go is something for history to record. But any look back is likely to signal 2008 as the year WiMax started its climb in earnest.

UPDATE: Interesting reading from Google, with an official company blog post that seems to answer at least the basic questions about whether the new Clearwire network will be open and neutral.