Intel's announcement that it'll take a charge of almost $1 billion related to its Clearwire investment represents another indication of the huge challenge that WiMAX technology faces. I had a chance to talk with Michael Finneran, our resident wireless expert, about this latest development, and here are a few of his insights:The bottom line, Michael said, is that, "Basically, the slow roll of WiMAX continues. And it is a slow roll." He pointed out that Clearwire has now deployed WiMAX networks in only two markets, Baltimore and Portland, OR. They are relying on Sprint 3G technology to provide their mobile data service in the rest of the country. Clearwire also has fixed-location pre-WiMAX networks deployed 46 smaller markets. They plan to announce further deployment plans later this year.
Apart from the obvious dollar losses, the biggest cost to Clearwire and WiMAX is in time lost to competing cellular technologies. Right now, WiMAX offers definite advantages over cellular 3G in terms of bandwidth--6 Mbps for fixed WiMAX, 4 Mbps for mobile, vs. about 500- 700 kbps for mobile 3G--at comparable prices.
However, Michael pointed out that 4G cellular, also called LTE for Long-Term Evolution, is based on the same fundamental technologies as WiMAX, namely MiMo (multiple input-multiple output) antennas and OFDM (orthogonal frequency division multiplexing). Once the cellular carriers upgrade to LTE, there may be little reason for anyone to continue with WiMAX.
"The thing working against them is time," Michael said. "Time and money." He cited a Forbes magazine estimate that Clearwire would need another $2.3 billion, on top of the $3.2 billion it's already raised, in order to fully roll out WiMAX--and that's just to its metro markets.
Besides cellular, WiMAX also has to compete with WiFi for users outside of the home or office. Free Wi-Fi access is becoming available in more places from Starbucks to Panera Bread and your local public library. On Long Island, Cablevision has deployed WiFi hotspots to provide free wireless Internet service to all of their cable modem customers, Michael noted.
Clearwire's stock has been hammered over the past year, diving from a high of $18.26 to below $5, resulting in Intel's $950 million charge.
