WiMax - the $3 Billion Gamble Begins

09 August 2006

Hard on the heels of News Corporation's announced intention to harness its DirecTV satellite broadcasting unit to a planned new coast-to-coast wi-fi network [WAMN: 04-Aug-06], US telecoms giant Sprint Nextel on Tuesday unveiled WiMax: the new hi-tech platform on which the venture will be built.

WiMax - an acronym for 'World Interoperability for Microwave Access' - is capable of transmitting a wireless broadband internet signal over a radius of ten or more miles, a massive extension of the average 300-feet currently achieved by wi-fi hotspots in airports, coffee shops and many homes.

Sprint aims to create a chain of relay stations across the nation from California to Maine, rivalling in size the US cellphone network. The estimated tower-to-tower range of WiMax signals averages at least ten miles, compared with the 4-5 miles of cellphone transmitters.

The concept, if it comes to fruition, is likely to revolutionize both the reach and usage of broadband. Rupert Murdoch, perhaps the most dollar-driven dreamer of them all, visualizes WiMax as the hub of a truly global media empire.

But analysts, 'wee, sleekit, cowrin', tim'rous beasties' that they be, are nervous over the cost of constructing such a network, which they estimate at up to $3 billion (€2.34bn; £1.57bn). Sprint, however, declined to comment on the contribution to be made by its partners.

Nonetheless, some analysts and industry experts question why the telco is set to embark on such a major capital investment when it is already ahead of its rivals in the provision of data services.

"Why compete against yourself? It doesn't make a lot of sense at this point," opines Signals Research Group analyst Mike Thelander, who predicted several weeks ago that Sprint would go down the WiMax route.

Data sourced from Wall Street Journal Online; additional content by WARC staff