Sidecut Reports

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.

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.

Make no little plans, the man said. So why just launch another research outlet? Instead, we decided to tackle the problem of diminishing long-form tech journalism with our new idea, called Sidecut Reports.

While this blog has been live since the start of the year, today marks the “official” release of our inaugural report, titled Xohm Or Go Home: Why 2008 Is WiMax’s Breakout Year in the U.S. — Or Else! It’s available for immediate purchase and download by clicking the blue button to the right.

To better explain our goals, we also issued a couple of press releases today, one about the company and one about the WiMax report. In terms of Sidecut the company, this statement gives you the general idea of what we’re up to:

Led by longtime industry journalist Paul Kapustka, Sidecut Reports represents the future of technology journalism, providing business professionals in a wide range of disciplines with deep background, up-to-the minute information, and decision-making analysis on pertinent topics that goes far beyond blogs at a price far less than that charged by traditional analyst operations.

That price is $149.95, and it gets you a whole lot of targeted information on a specific topic that you may have wanted to know more about, but didn’t have the time to find on your own. At Sidecut, our goal is to do the digging, reporting and analysis to give you the information you need to make intelligent business and investing decisions. In the case of our first report, here is some of what you get for your small investment:

The report begins with the latest news on the planned launch of Sprint’s “Xohm” WiMax network and then adds in a technical backgrounder on WiMax itself before exploring the technical and business reasons behind WiMax’s opportunities and challenges, concluding with several predictions for WiMax’s fate in 2008. Prepared in an easy-to-read style accessible to those who may not have completely understood WiMax before, the report is also free of any vendor influence, making it much different than analyst reports that may have been tailored to suit sponsor interests, or may be too deep in technical minutae to be understood by a wider audience.

Sure, we’re having a little fun with the “saving tech journalism” idea but you will be hard-pressed to find any mainstream tech publishers letting their reporters do long, in-depth pieces anymore. You’ll also come up empty-handed if you are looking for long analytical input from most tech blogs; they simply don’t have the time to do the deep digging it requires to produce something like our WiMax report, which is 23 PDF pages long, and also free of any vendor influence.

Over the next week or so, I’ll have some more blog posts explaining why I picked WiMax as the topic for our inaugural report — basically it’s because the technology itself (true mobile wireless broadband) interested me from a geek level, which made digging into the business and market nuances a fun and informative ride. The complexities of the world of WiMax — including the parameters set by available spectrum, the marketing might of an interested player like Intel, and the potential competition from the big telcos — confirmed all my thoughts behind Sidecut, in that it takes something of our reports’ length to fully explore and understand all angles of these kinds of topics. If your business, investment decisions or startup plans have a possibility of embracing the true mobile broadband promise of WiMax, spending $149.95 on our report is an incredible value for the “return on investment” our information and analysis will provide.

Is 2008 the breakout year for WiMax in the U.S.? It could be, if Sprint, Intel and their allies can get the so-called “Xohm” network up and running, giving WiMax the ability to find market traction before competing technologies can gain mindshare.

In our inaugural Sidecut Report, titled Xohm Or Go Home: Why 2008 Is WiMax’s Breakout Year in the U.S. — Or Else!, we take an in-depth look at the WiMax deployment scene in the U.S. market, one that focuses heavily on the Xohm launch planned by Sprint and its infrastructure partners Intel, Motorola and Samsung. You can purchase the report for instant download by clicking on the blue button on the right-hand side of this page.

With both up-to-date news analysis of reported possible joint WiMax ventures funded by Intel, Comcast or Google, as well as technical and market-opportunity backgrounders, the 23-page report provides the reader with an in-depth look at the most current state of the WiMax market in the U.S., and how it might create business opportunities for enterprises, investors and entrepreneurs in markets including mobile Internet businesses, software development, and mobile device manufacturing.

Prepared in an easy-to-read style accessible to those who may not have completely understood WiMax before, the report is also free of any vendor influence, making it much different than analyst reports that may have been tailored to suit sponsor interests, or may be too deep in technical minutae to be understood by a wider audience.

Here’s a snippet to whet your interest:

There are risks and rewards for such a move by Intel and any other partners who would purchase the Xohm business, not the least of which would be overcoming the significant operational, administrative and business challenges facing any new national communications network. The rewards, however, are large and clear. The delivery of true mobile broadband — a combination of Wi-Fi-type speeds and cellular-style reach — could open up markets for devices and applications that improve on the Web-browsing experience that makes Apple’s iPhone so popular, with bigger screens (like Nokia’s Internet tablet) or applications that make better use of mobility. Such new markets could mean millions, if not billions, for Intel and others selling WiMax-enabled silicon, devices and applications.

Some more:

The larger question for WiMax, especially in the U.S., is whether it can arrive fast enough to establish a beachhead before the major telcos get their next-generation cellular data infrastructure up and running. Since the country’s two biggest telecom companies — AT&T and Verizon — have recently made very public statements about choosing Long Term Evolution (LTE) cellular technology as their strategic pick for their next generation of wireless broadband services, WiMax’s eventual competitor is already in pursuit. The fact that LTE is still mainly theoretical at this point does give potential WiMax service providers a competitive window, but the clock is ticking on when that opening will close.

And from the “What makes WiMax Attractive” section of the report:

Another important area of WiMax cost savings is at the customer premise, where the mobile standard is already producing equipment and installation savings. Manufacturers and operators are already looking at home-gateway CPEs with price points under $100, down from an average of $500 or more just two years ago. Improved antenna technology is also all but eliminating truck rolls, as end-users are able to self-install most newer WiMax customer access devices.

I’ll have some more thoughts about WiMax, Xohm, LTE and other topics as the week goes on. But you can read it all by ordering your report today, via instant download. Questions? Send an email to kaps at sidecutreports.com.

Completely off topic, but on Super Bowl Sunday I think it is appropriate to ask why the cash-rich entity known as the National Football League still operates with medevial technologies, especially in places where a little silicon could go a long way.

Sure, the TV audience has it great, with the on-screen first down line being perhaps the world’s best marriage of technology and television. There’s also Instant Replay, which you could argue has made the game better or worse. Either way, it’s fun to watch. But with all its gazillions in TV income, I wonder why the NFL still does troglodyte things like using steel chains to measure first downs, just one of several luddite-like practices I’ve thought about while watching games this season. Couldn’t some combination of GPS and embeddable chips, or a sophisticated heat beam (known as a “laser“) do a better job of placing the ball? Or should thousands of dollars in wagers continue to rely upon the actions of a bunch of guys who you wouldn’t trust to level a picture in your house? Just askin’.

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