At its technology conference last week, Sprint Nextel offered significant new details on its WiMAX roll-out plans, now that it has allayed some fears about costs and deadlines by pooling its efforts with fellow 2.5GHz operator Clearwire. But the cellco – which despite some signs of recovery in its last quarter is still struggling against customer defections and falling margins ‘ was also keen to dwell on enhancements to its existing services that would start to impact performance more immediately than its grand WiMAX plans will.
The carrier is responding to T-Mobile’s Hotspot@Home WLan/cellular offering with plans to offer homezone tariffs and mobile VoIP itself, though using the Samsung Ubicell instead of the UMA/dual-mode approach favored by its smaller rival. Sprint Nextel has an RFP out for femtocells for its next generation networks, but in the shorter term is adopting the closest thing that is currently available in the CDMA world, the Samsung device first showcased at the CTIA show in March. Sprint will brand this the Airave home cell and will roll it late this year, sources said.
The Airave will plug into a home broadband connection to create a home cell of up to 5,000 square feet. It can handle three calls at a time, or CDMA 1xRTT data, and the user can leave it open or give Sprint a list of up to 50 authorized phones that can use the cell. It supports any Sprint phone except the iDEN models, but EV-DO is unlikely to be added for at least a year. Pricing has not yet been set but the cellcos says it will include unlimited calling in a monthly flat fee, as T-Mobile does, and the fee is likely to be similar to the $15 ($30 for a family plan) charged for Hotspot@Home. Also like the Hotspot@Home, the Ubicell can be carried around with the user and plugged into any broadband link, though only within the US (in-built GPS prevents users from trying to break US regulations by transporting the Ubicell abroad). There will also be a low cost option (rumored to be $4.99 a month) to rent the Airave purely to boost the cellular signal while in the home, but with no impact on normal calling and data plans.
While iDEN may be excluded from Airave, one of Sprint’s key challenges is to hold on to the user base, which in Nextel’s hands boasted very high loyalty and ARPU rates, but which has been deserting in droves since the carriers’ merger and apparent problems with the network and support. In particular, Sprint is trying to offer enhanced push to talk services to lure iDEN users on to CDMA ‘ PTT has always been the ‘killer app’ for iDEN, but development of a similar service for CDMA may be severely set back if Broadcom succeeds in one of its current cases against Qualcomm, which could bring a ban on phones incorporating the new Qualcomm-Sprint Qchat technology.
In the mean time, Sprint will brand all its push to talk offerings under the ‘Nextel Direct Connect’ brand, regardless of whether they are CDMA or iDEN based, in order to take advantage of the strong PTT associations the Nextel name still has. ‘It may not be as sexy as the WiMAX stuff next door, but it’s an incredible opportunity for our company,’ said Sprint Nextel chief marketing officer Tim Kelly at the technology summit.
Assuming Qchat can go ahead as planned, Sprint plans to launch it on EV-DO Rev A early next year, allowing these phones to conduct walkie-talkie style calls with iDEN Direct Connect phones. ‘Nextel is not a service, it’s an application and feature set,’ Kelly said, pointing to the way in which Sprint ‘ which is rapidly losing the ‘Nextel’ suffix in its own name ‘ will seek to position its acquisition in future.
Of course the planned WiMAX network remains the main focus of interest in Sprint’s future strategy and the carrier announced at its summit that it would brand the service Xohm, and said that it could invest as much as $5 billion in the network by 2010, despite sharing the roll-out costs with Clearwire.
The company said it expects spending on the network in 2007-8 to be at the low end of its previous estimates because of the Clearwire deal, around $2.5 billion, but then spending would ramp up in 2009, as it expects that, by then, the demand and technology will be proven and expansion of the system will accelerate. CEO Gary Forsee proclaimed: “We in fact will have a mobile broadband network at least two years ahead of other providers that will be out there.’
By the end of 2008, Sprint believes the network will reach 100 million potential customers, 70 million of them covered by Sprint and 30 million by Clearwire. Sprint expects the network to generate positive free cashflow from 2011 and is targeting WiMAX revenue of $2 billion to $2.5 billion in fiscal 2010. By 2010 it will cover 125 million people, although the rate of expansion would be dictated by the success of the service in its early years. Barry West, head of Sprint’s high speed wireless and 4G unit, said the carrier has commitments from device makers to embed 50 million units with WiMAX connections in the US over the next three years. Among these will be the already announced Sprint device partners, Motorola, Nokia, Samsung and ZTE. The cellco also has an important deal with Google to create a portal for the service. West – who has started referring to Xohm (pronounced Zoam) as ‘internet 3.0’ and has commissioned personalized Xohm number plates for his sports car – said that the service will launch with PC cards initially, but will then be embedded in laptops, digital cameras, portal music players, video recorders, GPS devices, and other gadgets. During Sprint’s demonstrations of the service at its summit, Motorola showed off a book-sized WiMAX desktop modem and a prototype PC card, while Nokia and Samsung promised internet tablets.
Sprint also gave a few hints as to the likely business model, confirming assumptions that it would sell open access on a subscription or session basis as with Wi-Fi, and that it will provide wholesaling. Initially, Sprint will take on the job of certifying devices for use on the WiMAX network, but later this will be delegated to testing firm AT4 Wireless. However, as with Wi-Fi, users will be able to purchase access via the web and will not have to activate their devices, so Sprint will have no control over the clients once a product is certified for use. Interestingly, Sprint Nextel CFO Paul Saleh said he expects a ‘very small’ portion of WiMAX revenues to come from advertising.
West also justified the decision by Sprint not to bid in the 700MHz auction (although its cableco partners may do so). He pointed out that, while 700MHz has very good range, and so is ideal for rural coverage, 2.5GHz is superior in capacity terms, and so better suited to Sprint’s multimedia, data-intensive, largely urban/suburban model.
Xohm should have a ‘soft launch’ in Chicago and Baltimore/Washington DC by year end and commercial kick-off in early 2008, offering speeds of 2-4Mbps.