Speedier wireless on the way via 4G

Sprint Nextel says a souped-up network, coming soon, will use WiMax to offer customers a new wireless experience.

Carriers have barely rolled out their new third-generation wireless networks, and they're already talking about the fourth generation, which could offer affordable high-speed Internet access for consumer electronics devices on the go.

Imagine a day when parents in California attending their daughter's soccer game can stream all the action live directly from their camcorder to grandma and grandpa in Florida, or a day when you can instantly download the latest U2 album onto your iPod.

Executives at Intel, Samsung Electronics, Motorola and Sprint Nextel say that day is coming soon, using an Internet Protocol-based network technology called WiMax that will quadruple download speeds over current cellular technology and offer cost-effective chipsets that can be embedded in everything from cell phones to digital cameras to MP3 music players.

"The Internet is going airborne," Motorola CEO Ed Zander said during a press conference earlier this week. "If you get outside the U.S., you'll see it's already happening in places like South Korea."

Earlier this week, Sprint became the first major U.S. wireless carrier to announce it will use WiMax to build its next-generation wireless network. Intel, Samsung and Motorola--all longtime supporters of WiMax technology--are working with Sprint to provide the infrastructure equipment used to build the network and provide the chipsets, handsets and consumer electronics devices that will access it.

Sprint expects to spend $3 billion over the next two years on building the network, which will go live in late in 2007. The company will use its existing 2.5GHz spectrum, half of which it acquired from the merger with Nextel, to deliver the new service.

While Sprint had been testing a slew of other technologies--including Flash OFDM (Orthogonal Frequency Division Multiplexing), a technology developed by Qualcomm's Flarion--to build this new network, it ultimately chose WiMax. The decision will likely make the technology a front-runner for other 4G network deployments that could be launched in the next few years.

Currently, players such as satellite TV providers and cable operators are bidding in a Federal Communications Commission auction for wireless licenses in the 1.7GHz to 2.1GHz spectrum, which, like the 2.5GHz spectrum, is ideal for WiMax.

"This is really the first big pickle out of the jar for WiMax."
--Craig Mathias, principal analyst, Farpoint Group

A new company called Clearwire, started by mobile-industry billionaire Craig McCaw, is already using a flavor of WiMax to deliver its wireless broadband service. The company, which recently raised $900 million, is also competing for spectrum in the current FCC auction.

"This is really the first big pickle out of the jar for WiMax," said Craig Mathias, a principal analyst at Farpoint Group. "It really legitimizes WiMax with big carriers such as Sprint throwing (their) weight behind it."

WiMax is a packet-based technology that's very similar to Wi-Fi, a wireless technology used in coffee shops, airports and other public areas to provide wireless Internet access. WiMax has often been called "Wi-Fi on steroids" because, while being similar to Wi-Fi, it actually provides users with slightly higher speeds over much longer distances than Wi-Fi. While Wi-Fi radios typically reach only a few hundred feet, WiMax radios can transmit data up to one to two miles under certain conditions.

"Wi-Fi is a hot-spot technology," said Rick Barton, director of sales for the Sprint Nextel account at Samsung Telecommunications America. "And when you move between hot spots, connections can be dropped, so you can't access it in a moving car, for example. Wi-Fi isn't really meant for mobility. But you really don't have that problem with WiMax."

In laboratory tests, WiMax supports peak data speeds of about 20Mbps (megabits per second). But average speeds in the "real world" are somewhere between 1Mbps and 4Mbps, comparable to what's offered through Wi-Fi, but much faster than the 400Kbps (kilobits per second) to 700Kbps downloads available using current 3G cellular technology such as Evolution-Data Optimized, or EV-DO. Sprint currently uses EV-DO to deliver its mobile broadband service today.

"The WiMax performance is astounding," Barry West, chief technology officer for Sprint Nextel, told reporters and analysts at the press conference in New York earlier this week. "But that's all meaningless unless you offer a service at a price that people can afford or are willing to pay."

Today Sprint offers an unlimited bandwidth wireless broadband service using its EV-DO network for $80 per month. The service has proven popular among some business travelers because it's more reliable and more ubiquitous than using Wi-Fi hot spots to access the Internet. But the cost, which includes the purchase of a $100 network card, is still too high for most casual consumers.

"Studies indicate that the average consumer is willing to spend about $40 a month for their cell phone," Mathias said. "So $60 to $80 for a data package is definitely more in the price range of the business user and not the consumer."

"Most consumers aren't going to pay a heavy premium for wireless access, but they may be willing to pay a little more for the functionality."
--Rick Barton, director of sales, Samsung Telecommunications America

There are several reasons why Sprint and other 3G wireless broadband providers haven't lowered their prices or haven't yet embedded EV-DO in more devices including consumer electronics products. One reason is the fact that EV-DO chipsets are still expensive to make. Unlike Wi-Fi chipsets, which equipment makers can get for about $10 a piece, EV-DO chips are much more expensive, thus driving up the cost of the service.

Indeed, this is what Sprint and its suppliers, Motorola, Intel and Samsung, say is WiMax's main selling point. These companies claim the chipsets that will be used in the devices and to build the infrastructure equipment will cost about a 10th the price of existing 3G chipsets.

Mobile WiMax also was recently standardized, a designation not yet bestowed on competing technologies. The fact that mobile WiMax has been standardized will help further reduce costs by allowing more suppliers to easily enter the market.

This, coupled with the fact that Intel, which essentially built the Wi-Fi network, is a big backer of the technology, could eventually spur greater adoption and higher supply volumes, making WiMax even cheaper. Many backers of WiMax are hopeful that these factors will help the technology follow a similar path as Wi-Fi, which is so cheap today that it's embedded as a standard practice in most laptops and is even making its way into other devices such as dual-mode handsets and some consumer electronics products.

"Embedding Wi-Fi chips into devices is a lot more cost-effective than doing it with EV-DO Revision A chips," said Samsung's Barton. "Most consumers aren't going to pay a heavy premium for wireless access, but they may be willing to pay a little more for the functionality."

But Sprint's executives say they aren't abandoning their existing 3G network. In fact, the company said last week that it plans to expand and upgrade its existing EV-DO network to a faster version of the technology called EV-DO Revision A.

"We will continue to grow our current EV-DO revenue streams," West said during the press conference. "But with WiMax we're creating a new market. We see revenue streams that don't exist today in Sprint's profile, and this gives us a significant advantage."

Sprint is convinced that by using WiMax it can offer customers a much faster service that will allow them to access and share richer content such as videos, music and pictures over a multitude of devices. And the company expects to do this at a price consumers can afford.

"My belief is that mobile broadband will completely change our lives," West said. "And Sprint will be there to make it happen."

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