Sprint Hopeful on Funding as WiMax Rolls out
Adoption of Sprint Nextel's Xohm WiMax service has been better than expected since it launched in Baltimore on Sept. 29, and the carrier is confident it will be able to fund the rest of its national network rollout despite the current economic crisis, Sprint executives said Wednesday.
"This is the dawn of 4G," said Barry West, president of Sprint's Xohm Business Unit, during an event Wednesday morning to celebrate the first market launch of the service, which was also webcast. Sprint plans to complete a national rollout of the long-delayed wireless broadband network over the next few years through a joint venture with Clearwire. WiMax is a wide-area wireless data technology that Sprint said typically delivers between 2M bps (bits per second) and 4M bps downstream and 1M bps to 2M bps upstream.
The company is confident that its partnership with Clearwire will be approved as forecast by the end of this year, said Sprint CEO Dan Hesse. He is also confident that despite a tight credit market and falling stock markets, the venture will be fully funded with US$3.2 billion promised by partners including Google, Comcast and Intel.
"Capital's a good thing to have these days," Hesse said.
Hesse estimated the full national rollout will cost about $5 billion, which will require the joint venture raising another $2 billion at some point in the future. Sprint hopes the credit markets will be more open then, but Hesse said the deep pockets of Sprint and the partner companies would ensure the further financing.
The economic crisis has hit Sprint's existing cellular business, cutting subscriptions among financial industry employees for one thing, but the impact has not been "dramatic," Hesse said. He expects continued fallout, with some consumers opting for less expensive phones and service plans, but said surveys show they are more willing to cut back on spending for TV and wired Internet access.
"We believe we are more insulated," Hesse said.
Consumer response to the Baltimore WiMax rollout has exceeded Sprint's expectations so far, West said. Sprint has deployed 180 WiMax base stations around the city, out of a planned total of 300. Maps on the Xohm Web site indicate coverage in the Baltimore area will continue to grow through next year. The company expects to commercially launch Xohm in nearby Washington, D.C., and in Chicago by year's end.
West acknowledged the reach of the network in Baltimore doesn't match cellular yet.
"We're not trying to go head-to-head with a cellular service today," he said.
Also at the Wednesday event, Sprint announced there are eight models of laptops available now that will work on the network, along with other devices. PC makers that will offer laptops with WiMax include Acer, Asus, Lenovo and Toshiba. Sprint is letting consumer electronics manufacturers take the lead on devices for Xohm instead of relying on its own branded devices from Sprint stores. WiMax devices are now being sold at six Best Buy stores in the Baltimore area, as well as other retailers. Customers can activate the service on their own after buying the devices. There will be no term contracts.
By year's end, customers will be able to buy a laptop add-on card that supports WiMax and Sprint's 3G data network, West said. Other dual-mode devices will follow. He would not specify pricing for a data plan that includes both networks, only pointing out that greater coverage generally costs more.