Mobile Musings, Mostly

Sprint’s WiMAX network, formerly known as Xohm, has now been reincarnated as a joint venture (JV) in a deal announced a few days ago. A multi-headed monster, the JV will include (besides Sprint of course) - Clearwire, Comcast, Intel, Google, TimeWarner Cable, Brighthouse Networks, and Trilogy Equity Partners.

Essentially the infrastructure of Xohm and Clearwire will be consolidated with an infusion of upwards of $3billion from the other parties; with the new company being called Clearwire and Sprint owning 51% of the new entity.

It is instructure to look at some of the background to this announcement to tease out the motivations of the various parties

1. Sprint itself has been going through extremely difficult times, which has seen a reduction in their subscriber numbers, a new CEO, and possible sale of the Nextel business. This deal has been a lifeline for a key piece of their future strategy, as they had been pretty much the only carrier pushing WiMAX in a ‘bet the farm’ kind of way. Without this deal, it is hard to imagine how long Xohm could have gone on, especially when they had already slipped on their rollout plans.
2. Clearwire gets access to a whole bunch of investment and also access to Sprint’s engineering resources (including their WiMAX IP) to help them with their rollout.
3. Google - With all their activity and eventual non-purchase of any spectrum at the 700Mhz auctions earlier this year, Google has now found a relatively inexpensive ($500 million) way to get into the wireless business. By providing the default web and local search on the new Clearwire service, with other offerings like Google Maps, Gmail, etc. preloaded onto Sprint devices on this new network, Google has managed to get itself into a strong position into this new nationwide wireless buildout. Yet another way to add to the advertising inventory, and another place to try out those Android-based devices that should be coming out soon.
4. Intel - As an early promoter and cheerleader of WiMAX, Intel had to figure out a way to make Xohm and Clearwire both viable entities. Since the arrival of their first WiMAX chip (codename Rosedale) and the recent Montevina chipset, Intel has been pushing to get WiMax connectivity built into various parts of the stack - CPE, laptops, mobile devices, etc. Build it (i.e. WiMax chips) and they will come was beginning to get just a little bit dicey for Intel.
5. Cable companies/MSOs - With the experience from their not-so-successful cellular JV, called Pivot, with Sprint, the cable companies had been looking for better ways to add a wireless offering to their triple-play bundle that has been so successful. Here is an interview with Comcast’s Tom Nagel - it gives you the MSO perpsective on this deal.

If you consider yourself moderately interested in the US wireless telecommunications market, you have probably heard something about the recently concluded 700 MHz auction. This part of the spectrum is slated to become vacant with the switch to digital television, scheduled to be completed in February 2009.

And in the months leading upto, during, and after the auction; you also witnessed what could be termed as a wireless telecom version of Sturm and Drang.

Driven primarily by Google’s letter to the FCC last year, a great part of this debate focused on the concept of open - to what extent would this auction ‘open’ up the airwaves ?

It is instructive to understand that that ‘open’ can mean different things to different people. Kind of - Where you stand (on open) depends on where you sit.

• If you are a mobile device manufacturer, you would interpret open to mean the ability to offer compelling devices to end consumers without really having to go through wireless carrier’s seemingly Kafkaesque certification procedures.
• If you are a mobile applications developer, you know that getting applications ‘on deck’ is not for the faint of heart. You want open to mean the ability to spend more energy on cranking out innovative applications and not worry disproportionately about the actual process to getting the carrier to approve the application on their network. The business model for the mobile application - well, that is another issue altogether. Apple’s recent announcement in the wake of its iPhone launch is a first step in simplifying the application/content discovery and business model for mobile applications.
• And when it comes to us poor consumers, we would like to BYOD - bring your own devices (and any other software/application with it). We want to use the devices we like with the carrier+calling plan, as opposed to using only the handful of devices that are available to us under the current model of carrier-locked devices for most calling plans.

Now, lets talk about the carriers themselves. After a great deal of back and forth, including Verizon suing the FCC on its open access rules for the auction, they have now made pronouncements that indicate an opening up of their networks to some degree.

Verizon Wireless launched their ‘Open Development Iniative (ODI) ‘ with much fanfare, promising to allow any device and any application to access their network. Under this program, devices are supposed to take 4-8 weeks to be approved by Verizon - potentially a dramatic reduction in the approval process.

What the costs will be for such an approval is unknown, as is the kind of data plan such a device would need. Part of the ODI launch is the intriguing possibility mentioned by Verizon about non-traditional devices (e.g. vending machines, gaming consoles, etc.) being able to connect to their network. Seems like a good way to hedge your bets in the M2M market, something I will visit in a future post.

AT&T however, insisted that their network had always been open - i.e. you could use any GSM device on the AT&T network.

And for those of you waiting with bated breath for WiMAX, Sprint announced their plans to release an SDK and open APIs (by the end of 2008) for Xohm - their WiMAX network. They are hoping to entice developers and hardware manufacturers to tie into the hooks for things like location services, device management, identity, and QoS and build some interesting (and hopefully revenue generating) applications.

Does this mean that the open access holy grail is just around the corner ? Not so fast - the wireless stack is one that wireless carriers have a great deal of incentive to control for as long as they can. Because with the control comes a large share of the consumer’s wallet.

However, it does seem like the degree of control they have historically exercised is slowly being eroded - it is interesting to note that it took someone with the muscle of Google (although not acting in a completely altruistic fashion) to initiate this process. I think the first real test of this will be when the first set of devices based on the Open Handset Alliance platform hit the US market - sometime by the end of 2008.

May we live in interesting times..