The WiMax joint venture between Sprint and Clearwire could be good news for end-users, who might soon be able to choose from a variety of new and competing broadband services.
The deal, announced Wednesday, includes investments totaling US$3.2 billion from Intel, Google, Time Warner Cable, Comcast and Bright House Networks. Each of the investor companies will be able to offer a self-branded service to customers.
In addition, end-users will be able to buy services from Clearwire, although branding for that service hasn't been determined, according to Barry West, who is chief technology officer for 4G services at Sprint and will be president of the new Clearwire. Sprint's brand for WiMax, Xohm, may still be used, he said. The venture will be called Clearwire because it's really a relaunch of the existing company and was easier to accomplish than launching a totally new entity, West said.
It remains to be seen whether the various partners will sell very different services under their individual brands, but the potential to do so is there.
The technology behind WiMax will allow the partners to offer different tiers of service, said Monica Paolini, the founder of Senza Fili Consulting. For example, a business person could subscribe to a top-tier plan that offers very reliable e-mail access. But a high-school student more interested in a low-cost plan might be happy to sign up for a service that is sometimes slow because the network will give higher priority to higher-paying customers.
"I think there's a lot of room for differentiation," she said, although she cautioned that we'll have to wait and see if the partners take advantage of the potential.
In addition, the fact that the new Clearwire will be separate from Sprint could allow it the freedom to develop innovative services, West said. "It's kind of nice that the new company will have some ... independence from Sprint, so we can create the new rules for the business model," West said. Exact details haven't been worked out, but it will be a far different business from cellular, he said. For example, there won't be any post-paid plans. In addition, Clearwire will reach most customers through devices they buy at retail with no significant price subsidy, he said.
The new Clearwire also plans to support innovation by releasing APIs (application programming interfaces) that allow any service, such as Skype, to run on the network, West said. The company will charge third-party service providers for access to an API that lets them set up their service to get priority over others, West said. That API will be available to anyone who wants it, he said. Working with this quality-of-service API will help third parties ensure that VoIP (Voice over Internet Protocol) calls, for example, don't run into delays as they can on the basic "best-effort" network, West said.
It's unclear, however, how that policy will affect the partners, some of which don't exactly have a clean track record in regard to open network policies. Clearwire has made waves historically for blocking VoIP traffic, and Comcast has recently come under fire for blocking peer-to-peer traffic.
The openness of the services may also depend on which partner is offering them to end-users. "Google is the poster child for open access," said Bill Ho, an analyst at Current Analysis. The search giant, which was the catalyst for the Federal Communications Commission's requirement that some of the recently auctioned 700Mhz spectrum allow for any device and any type of content, could offer a totally open network, while the others could impose limits on their offerings. "[Google's] whole mantra is that whatever they have in terms of applications in the online side should be on the mobile side as well," he said.
Ho suggests that different business models will emerge around the idea of openness, along the lines of Verizon Wireless' recent announcement. Verizon last year said that it would open its network to more
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