While investors -- and just about everyone in the world who has a television -- were watching the freak show reeling across Wall Street yesterday, another act was making its debut behind curtain No. 2. Sprint Nextel (NYSE:S) claimed a big first when it launched its next-generation mobile WiMax wireless broadband network in Baltimore.
The service launch is in only one small market, but it's an important milestone for the struggling carrier. It has now reached a commercially viable service level for a technology platform that many people pooh-poohed for years as being a pipe dream. With WiMax now a reality in America, the game is on to truly test the viability of this next-generation dream network.
Of course, the press from Sprint Nextel glows about what its fourth-generation (or 4G) network will do for consumers. New levels of speed and flexibility in connecting to the Internet will be on offer, including download speeds averaging 2 to 4 megabits per second and no contract required for service. That's about twice the mobile broadband speed you can get from AT&T (NYSE:T) or Verizon (NYSE:VZ) today.
But the quality of the services will only become clear over time, and the ubiquity of the network will take several years. If the deal to consolidate WiMax efforts goes through as planned, Clearwire (NASDAQ:CLWR) will carry the torch in launching future WiMax markets. There's a gaggle of technology and application companies behind the Clearwire venture, with WiMax champions such as Intel (NASDAQ:INTC), Google (NASDAQ:GOOG), Samsung, and Motorola (NYSE:MOT) tossing in billions of dollars to support the platform.
The vast ecosystem of partners gives the WiMax solution an above-average chance of offering lower-cost and more varied connectivity options to consumers. It also could pose a significant threat to the control that incumbent carriers hold over the end consumer, since WiMax modems, laptop cards, and other devices will be sold openly through major electronics retailers.
So starts a new telecommunications era, in which consumer-device companies are now forcing the model of open devices and applications into the closed wireless world. I doubt that the new model -- even if wildly successful -- will spell the end of wireless carriers as we know them, but it will certainly up the ante in the competition for consumers' dollars.
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