Sprint (S), still losing subscribers to AT&T Wireless and Verizon Wireless each quarter, is down to 48 million cellular customers. Many analysts believe the number will go lower. Its relationship with Palm (PALM) did not help the slide. Its adoption of the Google (GOOG) Nexus One may not either.
For three years, Sprint has been developing and building a network of 4G WiMax infrastructure. It has set up partnerships with WiMax pioneer Clearwire (CLWR) and brought in investors for the system which include Intel (INTC). Sprint is expected to release its first WiMax compatible phone this week. It was built by China manufacturer HTC.
WiMax systems are already deployed in 27 cities, but the signal is used almost exclusively by laptops with adaptor cards. Clearwire is working with Sprint to set up a system that can reach 120 million Americans by the end of the year, Given the huge infrastructure logistical hurdles and capital costs, the plan is audacious. Sprint’s competitors are at least a year away from launching a competing technology to WiMax which is known as Long Term Evolution (LTE). It may be that AT&T and Verizon believe that consumers are in no rush to get faster wireless broadband speeds.
And, that is Sprint’s real gamble. Will cell phone users switch wireless providers and handsets to have access to a faster internet and quicker downloads? It is not unlike the issue that the FCC raised recently when it said that the US needed faster wireline broadband. But no one has answered the question of whether people will come once it is built.
Sprint does not know how many people will migrate to WiMax. There will never be enough focus groups and polls to determine what the consumer will do when he is faced with the prospect of adopting something that is almost entirely new. If all Sprint gets is early adopters and mainstream handset users stay with the products they have, WiMax will be a bust.
Douglas A. McIntyre
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