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Predicting the Future Triumph of Clearwire's $14 Billion Broadband Wireless Network5/6/08 - Clearwire (NASDAQ: CLWR) and Sprint Nextel (NYSE: S) announced Wednesday that the companies will combine their broadband wireless units to create a $14.55 billion mobile wireless communications company to provide internet access, phone service, movies, games and a variety of other broadband wireless data services.
The new company, which will retain Clearwire's name, will continue developing a mobile network based on WiMax technology, which promises much faster speeds than the latest 3g cellular networks.
Unlike most 3G cellular networks, which have a maximum of 30MHz of spectrum, the Clearwire network will use 33 channels of MMDS spectrum in most markets, that deliver an astounding 190Mhz of spectrum.
MMDS spectrum was originally approved by the FCC to deliver wireless cable TV. In 1998, companies like SpeedChoice, based in Phoenix, Arizona, received an experimental license from the FCC to develop a two-way wireless channel so that customers could use the spectrum for high-speed wireless Internet access as well as several hundred movie channels, music and voice over IP services.
Combined with the special characteristics of Orthogonal Frequency Division Multiplexing, which is the secret sauce of WiMAX, the new Clearwire Company will have a delivery mechanism and plenty of spectrum to deliver an amazing portfolio of mobile and fixed broadband wireless data services.
Then consider what Google brings to the table. So far Google has been frustrated by AT&T's closed network, which has so far banned them from providing their real time location based advertising services for local vendors on the very popular Apple iPhone. One reason that AT&T does not want to run a bunch of data applications over its network because it simply doesn't have the bandwidth to handle anything but voice traffic, a problem that is inherit in every single 3G carrier's wireless network.
One reason the iPhone has been so successful is that, although it sucks on the AT&T network because the access is so slow, when users are near their home Wi-Fi access points that are feed by extremely fast cable modem and DSL networks, the iPhone shines like no other cell phone on the market.
Moreover, while WiMAX technology is new, so was cell phone technology back in the 1980's. I remember when people used to say, "Why would you want to make phone calls from an cell phone in another city?"
WiMAX will have the same effect on on DSL and cable modems that these two technologies had on dial-up Internet Service Providers. Why? Because even DSL and cable can't feed wireless networks with sufficient speeds to keep with the demand of heavy duty wireless data application demands.
Combine WiMAX backhaul with 802.11n Wi-Fi access points to provide widespread broadband wireless coverage and America will finally have the fastest wireless network in the world.
If DSL and cable modems companies were smart, they would join the club. They should formalize an affiliate program that allows cable and DSL companies to join a worldwide roaming agreement similar to way iPass and Wayport have been doing with Wi-Fi.
Most neighborhoods with cable and DSL networks are bleeding wireless signals from 1 out of every 5 homes in a given neighborhood. So when industry pundits tell you that broadband wireless is not widespread, they are sadly mistaken.
In rural areas, that might be the case, but not in the cities and suburbs of America.
The only thing that is not available for Wi-Fi and WiMAX network right now is a centralized billing center to collect call detail records for Voice over IP calls.
A similar problem that all cell phones had before most of the eliminated roaming charges and access to each others wireless cellular networks.
The Clearwire deal will unify wireless spectrum across America so that one company can create roaming agreements with every Wi-Fi hotspot provider, every small wireless Internet Service Provider as well as the DSL and cable modem carriers who do not want to be left out of the most powerful wireless network in the world.
Craig McCaw proved his intelligence about weaving together small cellular players to build one of the largest cell phone companies in the United States, which is a valid point for everyone who is doubting this whole deal, including the idiots that asked for the resignation of Sprint's CEO (who clearly understood the potential of this technology and the power applications that unified broadband wireless data networks will make possible).
Clearwire will soon be a force that will be unstoppable.
3G carriers should be extremely worried that in the near term their destiny is on the exact same route as the dialup Internet service providers. Sad but true. Will they go away? Absolutely not. But with simple mathematics, it is easy to assess where 3G's problems lie.
An broadband wireless access point with a wireless radio based on the 802.11n standard can provide 160Mbps of throughput. An EVDO, Rev. A radio can only provide 10Mbps of throughput. It is very simple to see that 160Mbps radio can deliver a lot more bandwidth to end users than a 10Mbps radio. It that is not clear, divide the throughput buy 20 users, which all share access to the radio. Would you rather have a connection with a 160Mbps divided by 20 users? Or a connection with a 10Mbps radio divided by 20 users.
The other problem is the limit of the spectrum channel. Most PCS carriers only have 30Mhz of spectrum, or less to carry data back and forth to the Internet. Clearwire has 190MHz. Would you rather drive a race car down a highway with 30 lanes or 190 lanes? Obviously more races can speed down a larger freeway.
That is what Google is involved in this deal and has demanded open access. Now their Android platform has a convenient way to access customers via a superhighway. This terrifies Microsoft. They last thing they need is a million open source coders developing new data applications that are license free.
What is in it for customers? Once your iPhone or smart cell phone can finally use a graphical interface to present information on nearby services and pay for them with your phone, the world as we know it will become a completely different place. The only thing stopping that from happening right now is the speed of the wireless network and the service providers coverage area.
I predict that the Clearwire network will eventually become the broadband service of choice. When the MMDS-based service is not available, customers can always fall back on Wi-Fi in public places and the slower 3G networks when their wireless network is the only one available on the outskirts of town and driving down the freeway.
One thing that I haven't covered here is Internet Protocol TV. Why do you think will happen if Google can put clickable advertisements beside TV programming as customers walk through a shopping mall or drive through the middle of New York looking for a place to eat?
Searchable video advertisements and video clips that can be forwarded to friends and family will most certainly change the way all people search for products and services regardless of where they are in the world.
Want to learn more about wireless technologies?
Keywords: frequency division multiplexing, wireless communications company, wireless cable tv, mobile wireless communications, sprint nextel, wireless internet access, experimental license, clwr, broadband wireless, google, cellular networks, delivery mechanism
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