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Winner: Sprint's Broadband Gamble Continued By Steven Cherry

First Published January 2008
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But Xohm is a high-stakes ­gamble nonetheless. Sprint is investing $3 ­billion in the new network. It has committed a wide swath of expensive radio spectrum. And by offering a data-­centric ­networking service, it is undoubtedly forgoing some revenue from voice calls, as well as from text messaging, ­ringtones, answer tones—just about everything that today makes a conventional cellular service profitable.

“Those are relevant to the traditional voice telecom companies, but we’re ­moving to a completely different model,” says Rebecca Hanson, Xohm’s vice president of strategy. “We’re creating a whole new business.”

According to Jeffrey Davis, a telecom analyst at the Yankee Group, Xohm’s data rates will be high enough to motivate many to discontinue their home broadband service entirely, just as millions of regular cellular voice customers have dropped their wire-line phone service. Sprint has yet to set prices, but they are expected to be comparable to landline broadband rates, which in the United States start at about $40 per month.

Perhaps Xohm’s boldest gambit will be charging customers full price for the phones and other devices they’ll use on the network—unlike the heavy discounts that have become standard in U.S. cellphone deals. In return, however, Sprint won’t require two-year contracts, or any contracts at all. Users will be able to go month by month or even pay by the day or hour, like Wi-Fi users at an airport. You might prepay for a gigabyte of data transfers, for example, or buy a coupon that lets you upload 100 photos to your Facebook page. In fact, if Xohm is as successful as Sprint hopes, camera manufacturers—and plenty of other consumer device makers—will incorporate chip sets compatible with Xohm in their products, and you’ll be able to upload those photos directly from your camera.

Armed with the right smart phone or laptop, you could stream video right from your kid’s soccer game

Eventually, Sprint officials hope to lure entire industries. For example, gas and electric companies typically build large-scale communications networks to monitor their ­sprawling distribution networks. According to Warren Causey, vice president of Sierra Energy Group, Xohm “offers ­utilities the ­advantage of no longer having to manage complex wireless networks.”

Perhaps most intriguing of all, Xohm will definitely roil the debate, currently raging among telecommunications executives and Internet companies, about what is called network neutrality. At issue is how much control carriers will exert over the networks that we use to access the Internet. The worst possible scenario has broadband carriers like AT&T and Verizon favoring one service over another, such as Yahoo over AOL, to such an extent that the Internet in effect fractures into pieces. It would become difficult or impossible to communicate with everyone. Even in such a case, a new, neutral nationwide broadband service—which Xohm aspires to be—could provide a haven from which the entire Net would be accessible.

Why WiMax? At least six different standards have been floated for mobile high-speed wireless. To understand why Sprint went with WiMax for Xohm, it helps to understand where the wireless network is today, and where it’s going.

Cellular carriers are at a ­crossroads. The convergence of the Internet and telecommunications—and in particular the carriers’ transition to the Internet Protocol from older technologies designed to carry voice—is occurring very slowly for traditional wire-line networks. But analysts are generally agreed that within a decade, wireless companies will have given up these older protocols in favor of breaking up voice calls into IP packets before sending them across high-speed networks.

If the wireless future will bring a consolidation of voice and data, it may also unify the communications protocols that underlie most of today’s cellular networks. Today we have two main cellular standards—GSM, by far the more popular worldwide, and CDMA, which is used by carriers in a handful of countries, including Sprint and Verizon in the United States.

In addition to these two voice-telephony standards (and a bunch of minor ones), there are several others for data, including (for GSM networks), Enhanced Data rates for GSM Evolution, the second-generation standard that iPhone users are stuck with, and High-Speed Packet Access (HSPA), a third-generation one mainly found in Asia and Europe.

WiMax, with its high data rates and reliance on IP, is generally regarded as a fourth-generation network. And by 2010 or so, it will face strong competition: a 4G cellular broadband successor to today’s GSM/HSPA networks, called Long Term Evolution (LTE), should be available, with data rates at least as high as WiMax’s current ones. Some CDMA carriers may also upgrade to LTE. There will be other contenders for 4G supremacy—Qualcomm, of San Diego, the inventor of CDMA, is pushing something called Ultra Mobile Broadband—but the main rivals will be LTE and WiMax.

The same basic transmission scheme underlies LTE and WiMax: Orthogonal Frequency Division Multiple Access, which is essentially what is used in the Wi‑Fi (IEEE 802.11) standard as well. OFDMA has, in other words, pretty much won the field for high-speed wireless data.


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