Sprint's WiMax Shines on Price, Not on Coverage
Prices and terms for the WiMax service that Sprint Nextel launched on Monday stand up against other wired and wireless broadband options, but a key measure -- coverage -- remains a question mark.
The Xohm service is to be the first national broadband service in the U.S. using WiMax high-speed wireless technology. The service, which launched commercially in Baltimore on Monday, carries a US$35-per-month regular price for home broadband and $45 per month for mobile use. (Introductory rates of $25 and $30, respectively, will last for six months.)
That's for a service with download speeds between 2M bps (bits per second) and 4M bps, comparable with many DSL (Digital Subscriber Line) and cable modem services in the U.S. A major advantage of WiMax is that customers can buy a mobile client device and use it on the road wherever the network is available. The service is priced for customers depending on their devices, so those who only buy and register a large, tabletop modem can get the less-expensive home plan. (They can travel with that modem and set it up elsewhere in Xohm's service area if they choose.)
If Sprint's speed claims are accurate, WiMax is something new in the Internet-access market: Internet access that can take the place of DSL or cable and also travel with you. Clearwire is rolling out its own WiMax network, starting in Portland, Oregon, that will be combined with Sprint's after the companies finish forming a joint venture later this year. Verizon Wireless and AT&T Mobility expect to start deploying another 4G (fourth-generation) technology, LTE (Long-Term Evolution), within the next couple of years and are speeding up their 3G networks in the meantime.
But although Xohm waves the mobility flag high, it will probably rely on stationary home users for its early success, analysts said. The problem is that roving users will find it available in so few places. Baltimore is the only commercial market for Xohm now, and just two more cities -- Chicago and Washington, D.C. -- are scheduled to come online this year. Even the coverage in the Baltimore area, which Sprint lays out in an interactive map on the Xohm Web site, is patchy today and doesn't look like it will cover most of the area until late next year. However, most of downtown does seem to be covered now.
The lack of coverage makes it hard to fairly compare Xohm with cellular data offerings, analysts said. That's the multibillion-dollar challenge for Sprint and its partners.
"The cellular guys have been able to do it because voice has been paying the bills ... and it's been 20 years since the cellular people came out," said In-Stat analyst Allen Nogee. Despite a joint-venture deal that brought together $14.5 billion from a consortium of manufacturers and service providers, Nogee isn't sure Sprint and Clearwire will be able to build out a strong national footprint given today's credit markets.
However, the rates and terms for the service are fairly attractive and could put pressure on competitors over time, analysts said. In addition to the main home and mobile options, customers can buy service for any two devices for $65 per month, or $50 per month for the life of their Xohm membership, if they sign up during an introductory period. And 24 hours of service is available for $10, an option that may be attractive for travelers who find themselves in a Xohm coverage area with a WiMax-equipped Intel laptop.
Monthly plans include a personal Web portal with Google Maps and Gmail services, as well as 5G bytes of storage for personal content that can be accessed from a browser. A McAfee Privacy Service keeps information safe online and lets parents control what their children access on the Internet, according to Sprint.
"They're clearly trying to undercut some of the mobility players using 3G, and they clearly are going after homes, not just mobile devices," said Avi Greengart, of Current Analysis.
The service has some advantages over cellular plans that may be significant for some customers. For one thing, Xohm has no term contracts. Customers who want continuing, postpaid service will have their credit cards billed each month until their service is cancelled, but they won't have to commit in advance to keeping Xohm for a year or two years, according to Sprint.
The company is promising "an open Internet business model" set apart from the typical "walled gardens" of mobile data services. Xohm is designed for access to the full Internet and any application, on devices that don't have to be rigorously reviewed by the carrier. By contrast, Verizon's 3G data services restrict use to e-mail, Internet browsing and intranet access.
There will be no hard caps on the amount of data subscribers can download in a month, said Xohm spokesman John Polivka. But in its terms of service, Sprint says it may "limit the bandwidth available for certain bandwidth intensive applications or protocols, such as file sharing."
There are also other differences from typical cellular plans: Accounts will be linked to subscribers rather than devices, so customers can add service for another device without having to open a new account. And those devices will be sold in retail stores as well as by Sprint, and they won't be subsidized. The two products available now from Sprint, a $79.99 home modem and a $59.99 PC Card, are fairly competitively priced. More devices, including a USB (Universal Serial Bus) modem, the Nokia N810 WiMax Edition Internet Tablet, and Intel Centrino 2 WiMax laptops, are expected later this year.
To help ease the mobile coverage problem, by year's end Sprint plans to introduce a dual-mode 3G and WiMax device that can step down to the carrier's national EV-DO (Evolution-Data Optimized) network outside WiMax coverage areas.