Sprint hints at cutback on ambitious nationwide WiMax rollout

After a much ballyhooed announcement last July that saw Sprint Nextel and Clearwire promise a nationwide rollout of high-speed mobile WiMax by the end of 2008, the deal between the two companies has officially fallen through.

In a press release issued by Sprint on Friday, the wireless carrier said, "the two companies could not resolve complexities associated with the Letter of Intent and failed to reach final agreement on the terms of the transaction."

While Sprint promised to continue its deployment of a WiMax network, the official announcement also hinted at a change in plans.

"In light of this announcement, Sprint is reviewing its WiMax business plans and outlook, and the company expects to comment further on these topics early next year."

Julien Grivolas, senior analyst at Ovum, said a major reason for a possible cutback in its plans to rollout a nationwide network was the financing.

"The two companies were supposed to share the cost," said Grivolas.

The cost is estimated at $5 billion with Sprint covering 65 percent of the U.S., mainly the more densely populated areas, and Clearwire covering the rural market, about 35 percent of the nationwide coverage area.

Beside  throwing into limbo the possibility of a nationwide WiMax network, the end of the Sprint Clearwire deal could be a house of cards in which other more silent partners cut back on their WiMax plans.

In particular, Intel had promised dual-mode Wi-Fi/WiMax chip sets for its mobile line of products, and Samsung, another silent partner in the deal, was expected to launch WiMax-enabled phones. However, without a nationwide network to sell against, these companies may decide to pull back on their plans as well.

Grivolassaid that the end of the Sprint Clearwire deal could have an overall chilling effect on WiMax technology in general, at least for the short term.

There is still the possibility that the two companies will patch things up and continue as planned.

WiMax offers benefits to both vendors and users who could find in the technology lower cost of deployment and reduced usage fees.

WiMax has a potential range of 50 miles, far superior to Wi-Fi range thus requiring fewer access points to deploy and support. It is also an all-IP network making it easier to manage and secure using the same network and infrastructure that is already in place.