Like many technologies before it, including digital switching and IPTV, WiMAX technology’s roots are being laid in rural markets. The first WiMAX deployments are happening in towns like Madison, South Dakota and Rexburg, Idaho, and are being deployed by small independent operators not familiar to most, including DigitalBridge Communications and Sioux Valley Wireless. It’s not surprising. Many new technologies are vetted out in this manner, only to eventually gain mass market attention in large urban areas. IPTV is probably the most recent example. I remember listening to rural telcos like CC Communications of Fallon, Nevada and Chibardun Telephone of Cameron, Wisconsin talking about their pioneering video over VDSL deployments way back in 1997, almost a decade before AT&T began to get all of the attention. This scenario is repeating itself with WiMAX. The important early lessons about WiMAX and its capabilities/limitations will be played out in Madison, not in Washington DC or Baltimore.

These rural markets are also great laboratories for the competitive impact of WiMAX. DigitalBridge and Sioux Valley are deploying in some markets where either DSL and cable modem (or both) are present. It will be interesting to watch how consumers react to this new broadband option. Will the broadband portability and mobility that WiMAX provides trump wireline broadband, or simply augment it? Will consumers abandon wireline broadband in favor of broadband wireless WiMAX in much the same way many consumers are abandoning wireline voice in favor of wireless? In a recent interview, Don Marker, CEO of Sioux Valley Wireless told me, "The service is portable…something that no other existing service can offer. In the long run, it is very likely that our portable/mobile service will displace fixed services just as cellular service has done with fixed telephone service." All interesting and important questions, with huge implications for the entire telecom industry. Implications that are being revealed early on in places like Butte, Montana.

DigitalBridge Communications (DBC) claims to have launched the first mobile WiMAX (802.16e) network in the U.S. in Jackson Hole, Wyoming. DBC sells the service under the BridgeMAXX brand, and offers a 3 Mbps download package for $40/month. Current BridgeMAXX fixed-service users can add the mobility feature for a bundled price of $30/month. DBC uses Alvarion equipment in Jackson Hole market, as well as in its other Wyoming, Idaho, Montana, and Virginia markets.

Comcast has revealed some of their WiMAX strategy. They plan to aggressively use femtocell technology to deliver seamless mobility services to residential subscribers, and expect to achieve 8 Mbps in throughput. The Clearwire partnership which Comcast and other cable companies invested in will set aside 5 Mhz of spectrum for femtocells. Femtocells create a mini wireless base station (or cell tower) in the home and can route wireless voice calls and data sessions originating on mobile and portable devices through it. The goal is to provide better in home wireless coverage for mobile devices, thus offering wireless voice services that can conceivably rival Comcast’s wireline IP voice service. Comcast sees femtocells as a key wireless strategy for them, because their customer base is primarily residential customers. Light Reading’s Cable Digital News revealed the Comcast femtocell strategy. Dave Williams, Comcast’s senior VP for wireless and technology was quoted in the Light Reading article as saying, “We’ll be pushing WiMax femtocells because we have a good customer base in the home -- we sell HDTV, VOIP, and high-speed Internet connectivity. We want to take that experience in the home and add mobility.”

The revelation is a peak into an interesting competitive development. Comcast and their WiMAX cable brethren intend to maximize their Clearwire investment to offer a suite of wireless services that they hope will rival their telecom competitors. By using femtocells, in theory at least, they can leverage their own broadband network with Clearwire and create a mobility experience that won’t falter once a subscriber enters their home. By so doing, Comcast can now offer seamless mobility, in and out of the home, and also appeal to customers who want to (or already have) cut the wireline cord and aren’t interested in a traditional triple play service. The service is a long way off. The femtocells will need to go through the WiMAX certification process, which could take months or even years.

All eyes will be on Baltimore this Fall. Barry West of Sprint/Xohm/Clearwire announced that Baltimore will be the launch market for their WiMAX effort in September. It will make Baltimore the largest North American market for WiMAX (for the time being) and a true test of WiMAX’s capabilities on a large scale. West announced the launch at his keynote presentation Tuesday at the WiMAX Forum Global Congress in Amsterdam. The launch is somewhat behind schedule. Sprint/Xohm had targeted Spring 2008 for these initial launches. The Washington D.C. market will follow Baltimore and launch WiMAX in the fourth quarter of 2008 according to West. The details are in this telecoms.com post.

Clearwire is feeling quite confident these days. The emerging WiMAX provider held an investor conference and outlined their plan for 4G domination. We're "building the communications company of the future, today," says Clearwire CEO Ben Wolf. Clearwire chief strategy officer Scott Richardson calls it "the second coming of the Internet." It was quite the WiMAX pep rally. Clearwire executives say they intend to build a seamless nationwide 4G network way ahead of their competitors, namely Verizon and AT&T.

From a powerpointware perspective, the strategy looks real impressive. Clearwire intends to offer a five product suite of services which will include residential voice and broadband, mobile voice and broadband, and mobile entertainment. They intend to leverage their investor partners considerably, gaining access to tens of millions of existing subscriber relationships immediately. With their cable company partners, they intend to extend the cable entertainment experience "into the palms of consumer's hands." They intend to utilize Google's Android platform for a suite of "compelling" mobile applications. Intel will contribute by powering millions of end user devices and do for WiMAX what it did for Wi-Fi, in effect bringing it to the mainstream. Wolf says that the average consumer's total household spend on communications, ranging from $109-$258, is up for grabs, and they intend to capture as much of it as possible.

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A stated desire of regulators is to foster competition for broadband. They claim that many of their policies are created to achieve such a desired outcome. Sprint and Clearwire are exploiting this desire with regulators with their most recent regulatory filing. They are positioning WiMAX as the desired “third pipe” into the home - a broadband pipe that will compete with the other two dominant broadband pipes, DSL and cable modem. While still a concept, a wireless third pipe into the home is building momentum.

Whether it’s Sprint/Clearwire with WiMAX or Verizon/AT&T with LTE, wireless broadband technology is evolving quickly. Its ability to rival wireline broadband service is approaching – and quickly. I’ve heard the argument that wireless broadband will never really rival wireline broadband services, especially with FTTH gaining momentum. That’s certainly true. But I wonder if it misses the point. Wireless broadband won’t rival FTTH speeds, but it doesn’t have to. All it has to do is provide “enough.” When it does provide “enough,” a fair number of customers will see the same compelling convenience with wireless broadband that they saw with wireless voice. Those customers will cut the wireline broadband cord, in much the same way they cut the wireline voice cord. Will it be everyone? No. But will it be enough to create serious competitive implications. Absolutely.

Covad, a San Jose, CA based competitive services provider, announced the successful trial of WiMAX services in the San Francisco market. The trial results will lead to a commercial launch of WiMAX service later this year. Covad intends to offer a business class symmetrical 6 Mbps service, using equipment from Axxcelera. The service will initially launch in Los Angeles, Orange County and the San Francisco Bay Area.

A new report from Juniper Research suggests that the burgeoning WiMAX opportunity has the potential to take 12% of DSL customers from existing service providers within 5 years. The report’s author Howard Wilcox says WiMAX will be particularly attractive in “…areas where the existing DSL speed is suboptimal.” Wilcox points out, and rightfully so, that WiMAX deployments will start out as fixed broadband wireless deployments, and WiMAX service providers will aggressively pursue existing broadband subscribers. WiMAX will have a competitive advantage as well – portability. Customers will be able to take their broadband access with them, both locally (where coverage is available), and nationally (assuming adequate roaming relationships get established). That advantage will grab the attention of some existing broadband subs.

Of course, this won’t be a “cake walk” for WiMAX providers either. There are several details to be worked out, the most important of which is proving the technology works on a massive scale and can provide the level of service that customers will expect and demand. Wilcox also points out another important one, “Brand identification and service differentiation are major marketing challenges facing new WiMAX operators.” Predictions like this one are sure to multiply in the wake of the recent news of Sprint and Clearwire joining forces with Intel, Google, and the cable industry for a massive WiMAX boost in the U.S. Assuming the deal consummates and the technology works, WiMAX’s impact on the competitive landscape for both wired and wireless broadband cannot be underestimated.

Update - May 7, 2008: It's official. Sprint and Clearwire announced the formation of the "new" Clearwire, as discussed below in the original May 6th post.

A mega deal which involves Sprint, Clearwire, Intel, Google, Comcast, Time Warner Cable, and Brighthouse Networks is on the verge of being announced according to the Wall Street Journal (subs. req.). The deal will merge Sprint and Clearwire's WiMAX assets into a company valued at $12 billion. The company will retain the Clearwire brand and will be led by Clearwire's CEO Ben Wolff. The cable company investments totaled over $1.5 billion, led by Comcast who ponied up over $1 billion. The deal has been rumored for months. It is expected to be announced as early as Wednesday.

It appears as if WiMAX will now have the foothold it needs to become a 4G wireless force in the North American market. Cable companies including Comcast, Time Warner Cable, and Brighthouse will now have access to a legitimate broadband wireless network and begin the long process of integrating wireless opportunities into their core business. The deal will allow cable companies to sell broadband wireless under their own brand. It's somewhat surprising that cable companies and Sprint are partnering for another wireless venture, given the failure of their previous joint effort, Pivot Wireless. Perhaps Pivot's demise was intentional to make way for Clearwire. It's not clear what this development means for cable's AWS spectrum holdings. Regardless, this new WiMAX momentum will provide interesting competitive observations. Sprint will conceivably gain a considerable 4G lead over their main competitors, AT&T, T-Mobile, and Verizon, who have all tagged LTE as their 4G technology of choice. It will be at least a couple years before we see them bring something to market though. It's some welcomed news for Sprint, which has seen nothing but rumors focused on their troubles swirling for the past few weeks.

AT&T gave a glimpse into their 4G strategy, announcing they will use their considerable 700 MHz spectrum holdings for forthcoming long term evolution (LTE) technology. It’s the clearest direction AT&T has given to date about their long term 4G plans. AT&T says its 700 MHz spectrum will cover 100 percent of the top 200 markets and 87 percent of the U.S. population, “enabling the company to better compete in a vibrant and dynamic marketplace.” RCR Wireless is reporting that AT&T will also supplement its 700 MHz spectrum with AWS spectrum they acquired in a 2006 FCC auction.

In other 4G news, Sprint announced a delay in their 4G WiMAX plans. Xohm, Sprint’s identified WiMAX brand, will not launch in April as had been previously discussed. Sprint executives continue to publicly support Xohm, and promise it will soon be a reality. Verizon Wireless is expected to announce their 700 MHz plans soon. They have previously committed to LTE, but they will offer more details on their 700 MHz plans on April 4th. All of this talk of LTE and 4G by AT&T and Verizon should put pressure on their cable MSO competitors to outline their 4G wireless strategy. Will they go it alone with their own AWS spectrum, or will the rumors of a WiMAX joint venture with Sprint come true. With LTE research and development efforts providing wireless 100 Mbps speeds, one would have to conclude that the cable industry can’t afford to sit 4G out, as they have with the first three generations of wireless.