Sprint MMDS delay no surprise

Sprint’s (www.sprint.com) announcement Wednesday that it is delaying further implementation of fixed-wireless services wasn’t a shocker. Peter Jarich, Strategis Group (www.strategisgroup.com) director of broadband research, said the news was less dramatic than it could have been.

“I think everyone expected that they were going to cancel it or really put a hold on it, but all they’re doing is putting it on the back burner,” he said.

Andrew Kreig, Wireless Communications Association (www.wcai.com) president, wasn’t surprised either.

“The industry is extremely focused on not just deployment, but efficient deployment,” Kreig said, adding Sprint’s decision fell in with what prudent managers are doing.

That’s not to say that Sprint’s news pleased everyone. Hybrid (www.hybrid.com) has supplied wireless broadband equipment to Sprint in 14 markets, and Michael Greenbaum, Hybrid president & CEO, said Sprint’s decision to back off would have an impact on his company.

Sprint has made no secret of its requirements for more advanced product, Greenbaum said. The two fundamental issues that have to be addressed are the high cost of installation and the need for a non-line-of-sight product. Hybrid has been working diligently to overcome these.

“The one thing I couldn’t overcome is Sprint’s drop in long-distance revenue,” Greenbaum said, noting that the MMDS sector has its own set of dynamics, but “we have to address the telecom sector and there are other forces at work as well.”

Sprint is an important customer for Hybrid, but it isn’t the only customer, Greenbaum said. For example, WorldCom (www.worldcom.com) plans to launch in eight more markets this year, and Hybrid is supplying equipment for four of those. It also recently announced sales of systems to carriers in Russia and Pennsylvania.

Hybrid’s ongoing relationship with Sprint includes supporting and upgrading more than 52,000 CPE units already installed. And Greenbaum has no plans to lose contact with Sprint as his company works on second-generation equipment.

“You better believe Hybrid is knocking on their door and keeping them informed of our progress,” he said.

Sprint’s concerns revolve around the cost to install equipment and provide service and the limitations of first-generation technology that include line-of-sight, data-only issues and antenna aesthetics, according to a spokesperson.

The decision to suspend new-customer acquisition and installation was not based on the second-generation trials that Sprint has been conducting. These trials will continue, according to Todd Rowley, Sprint vice president of spectrum management and business development. Jarich said it sounds as if Sprint has been testing “every second-generation vendor out there.”

In a letter to the Instructional Television Fixed Services (ITFS) community, Rowley said that Sprint is hopeful that the advantages of next-generation technology — self-installation, increased capacity, no line-of-sight limitations, portability and the ability to offer voice services — will make fixed wireless a viable consumer product. Sprint has numerous lease relationships with ITFS licensees. Cristian Parrino, Spike Broadband Systems (www.spikebroadband.net) vice president of marketing, said he wasn’t surprised with Sprint’s decision because its strategy always has been different from other fixed-wireless providers in the world. (Sprint is not one of Spike’s broadband customers.)

“(Sprint’s) one of the only ones that is only targeting residential subscribers with data-only services,” he said. Elsewhere in the world, carriers are using the same spectrum to target small-to-medium businesses and residential with both voice and data services, where the revenue potential is significantly higher, he said.

“The other thing that’s unique about Sprint is that they have taken on a portion of the work that is two to three times greater than most carriers in the world — acting as technology developer, system integrator and service provider,” he said.

In the rest of the world, carriers can’t wait for the technology leap to second generation before deploying service, Parrino said. Time to market is an issue, whereas market pressures may not matter as much in the United States.

Sprint is in a good position in another way. If second-generation systems fall short, and it decides to back off fixed-wireless services completely, it does have other options for that spectrum. When the FCC (www.fcc.gov) announced that MMDS/ITFS licenses would not be relocated to make way for 3G mobile services, it added a mobile allocation to the spectrum designed to result in the development of new and innovative technology and services. The FCC said it would have to explore the service rules that would apply to permit mobile operations in the band without causing interference to the current fixed services. But long term, Sprint may be able to use that spectrum for expanding 3G mobile services.

Andy Fuertes, Allied Business Intelligence senior vice president (www.alliedworld.com), said there were some who thought from the beginning that Sprint was acquiring the MMDS spectrum with an eye to its potential for mobile. “I personally thought there would be an evolution to portability and then mobility later down the road,” he said. Sprint could have a compelling offering with fixed wireless, VoIP and portability, which would differentiate it from cable and DSL, he speculated.

“The company might have of vision of where they want to take this spectrum that they’re not sharing completely, and maybe the solution to achieve that vision is not ready,” Fuertes said. He thinks Sprint might be able to wait a year or two — probably not more — considering what’s going on now in DSL and cable.

Based on the problems with residential long distance, Sprint needs a local services offering, Fuertes said. Fixed wireless could help with this.