The wide world of Wi-Max

Business 2.0 details how just a few transmitters can provide high-speed Internet connectivity for entire cities.

By Michal Lev-Ram, Business 2.0 Magazine writer-reporter

(Business 2.0 Magazine) -- Wireless Internet service works great - so long as you're in a Wi-Fi hotspot. But what if you could have wireless Internet everywhere you go, available on your laptop and cell phone, at speeds that can leave both DSL and 3G data networks in the dust?

That's what Sprint Nextel customers could get later this year, when the Reston, Va., carrier starts rolling out its $3 billion mobile Wi-Max network.

The promise of Wi-Max, which stands for worldwide interoperability for microwave access, has been talked about for years. Unlike Wi-Fi, which was designed to send signals no farther than 300 feet, only a few Wi-Max transmitters are needed to blanket an entire city with high-speed Internet connectivity.

Fasten your seat belts: The Internet service model of telecoms, cable companies, and cellular operators is about to be disrupted.

Sprint says its new service will go live in three markets - Baltimore, Chicago, and Washington - by the end of 2007. It will be the first U.S. carrier to launch the next-generation network, which already exists in South Korea and is five times faster than current 3G cellular data services. Sprint hopes to have coverage available to 100 million Americans in about 35 regions nationwide by 2009.

That could provide a much-needed boost to the nation's third-largest mobile operator, which has lately been suffering. Last quarter alone, the company lost more than 200,000 postpaid subscribers. "

What's the killer app? It's access to the Internet wherever you go," says Barry West, president of Sprint's mobile broadband business. "Wi-Max will be like Wi-Fi on steroids."

It also means a beefed-up business model. With 3G data services, users are charged separate fees for phone and laptop access. But with Wi-Max, Sprint (Charts, Fortune 500) will charge users once for access across multiple devices, with no limits on where they can surf. Customers will even be able to use applications like Skype that compete with the carrier's voice service.

"Cellular carriers tend to be a walled garden," West says. "Wi-Max will give us the capacity to completely open the Internet."

Analysts are bullish on the prospects for Wi-Max. Boston-based Yankee Group is forecasting 28 million subscribers by 2011, while research firm In-Stat says Wi-Max infrastructure equipment and devices will become a $5 billion market within four years, up from $177 million today.

To supply the necessary phones, computer chips, and back-end equipment, Sprint is working with heavyweights like Intel (Charts, Fortune 500), Motorola (Charts, Fortune 500), Nokia (Charts), and Samsung. PC cards will be available when the service launches, followed by gaming devices, laptops, cameras, and even phones with built-in Wi-Max by the end of 2008.

Wi-Max "will enable all sorts of new devices we've never even thought of," says Fred Wright, senior VP for networks and enterprise at Motorola. "Any applications that are cumbersome today because the cell phone can't provide a fast enough data rate, those will be the sweet spots Wi-Max will be able to address."

That should benefit Wi-Max chipmakers such as Intel and Beceem Communications, a Santa Clara, Calif., company that has already landed more than $100 million in funding.

Sprint is not the only Wi-Max player. Clearwire, founded by famed cellular entrepreneur Craig McCaw, should have its network up and running in 2008, with coverage for 45 million people. "We're doing for the Internet what cell phones did for voice 20 years ago," says Clearwire CEO Ben Wolff.

In South Korea, Wi-Max is already offered by the country's largest mobile operators, SK Telecom and KT. Infrastructure and devices are provided by Samsung, the first of the top three handset manufacturers to bring to market Wi-Max-ready smartphones and PC cards. "Eventually, we want to put mobility on every object," says Hung Song, VP of the global marketing group at Samsung.

In superconnected Seoul, however, 90 percent of mobile customers already use data services. That's partly why only 5,000 people have signed up for the service since it went up last June. Samsung expects that number to be far higher by the end of the year.

Sprint has yet to reveal pricing details, though the company says its rates will be competitive with those charged by DSL and cable operators. "We intend to make this as simple as possible," West says. "All you'll have to do is buy a laptop and it will ask you if you want mobile broadband access. We'll do the rest." Hunting for a Wi-Fi hotspot may soon sound as antiquated as dialing in to CompuServe on a 2,400-baud modem.  Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.