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Today marks the formal launch of Sprint’s Xohm network, and celebrants are gathered in Baltimore to show off their new WiMAX-enabled gadgets. But after chatting with an executive from Lenovo, I wonder just how open Sprint’s network will be, and how that lack of true openness might slow the adoption of WiMAX.

Lenovo is on hand showing of its five laptops designed for Sprint’s WiMAX network, including the super-sleek x300 that competes with the MacBook Air. David Critchley, worldwide segment manager with Lenovo, said the x300 was supposed to launch last spring with WiMAX inside, but Sprint’s delays nixed that plan. Critchley expected that Lenovo would have the most WiMAX enabled products ready to launch today, in part because it had been preparing for WiMAX for so long, enabling it to get hardware ready in time for testing. He called Sprint’s testing pipeline “narrow,” and expected others to only have one or two devices ready for launch.

Wait. Testing? This is supposed to be an open network ready for any device. Now I’m worried that Sprint’s approval process will keep WiMAX from becoming as popular as Wi-Fi. Isn’t that how Verizon is supposedly going to keep its network from becoming entirely open? Maybe it’s the difference in operating on unlicensed spectrum as Wi-Fi does, or licensed as WiMAX does, but getting as many devices as possible on the network will be key for WiMAX success.

A bottleneck caused by Sprint’s testing isn’t going to help grow the number of gadgets and consumer awareness rapidly. As an executive over at Motorola told me, WiMAX is likely to win out when (a) it’s seamless and easy for consumers to access and (b) carriers make it easy for WiMAX devices to hop on and off their networks. An approval process makes both less likely, especially if it moves slowly.

The worsening financial environment that has stymied the sale of Embarq, made short-term borrowing more expensive for AT&T, and generally made credit hard to come by, could also slow the deployment of the Clearwire nationwide network. The company and analysts say the joint venture that will link Sprint’s and Clearwire’s WiMAX spectrums should close before the end of the year, but building a nationwide network might take longer if debt stays expensive.

When asked if the current credit crunch would affect Clearwire’s ability to build out its network,  Susan Johnston, a spokeswoman for Clearwire, emailed the following statement: “The nationwide build plan for the new Clearwire is ambitious, and we believe it’s the right thing to do for our business. However, we have the flexibility to modulate our rate of growth, and will tap into the capital markets when the conditions are favorable.”

Translation: Clearwire’s smart enough to realize that it will take more time to sell the at least $2 billion in debt needed to bridge the gap between the costs of a total network buildout and the $3.2 billion in cash it receives after its joint venture closes. Christopher King, an analyst with Stifel Nicolaus who said he was surprised Clearwire’s stock was holding up as well as it is, adds, “Clearwire clearly needs access to capital more so than any other telco we cover in order to meet its business model … but this is not a death knell for the company.”

Like Johnston, King pointed out that the company has flexibility on the timing of its network buildout, although he said estimates of a $2 billion gap were on the low end; he estimates the company could need as much as $5 billion. It appears that Clearwire will be like most firms facing the downturn — ready to hold off on purchases until things look a little better. That would be a shame for equipment companies like Motorola or Alvarion as well as for those of us eager to try out a new wireless broadband network.

GigaOM Mobilize conference -- Carriers panel

Without carriers and their data networks, mobile applications wouldn’t be possible. So let’s show them some love, says Chetan Sharma, of Chetan Sharma Consulting, the moderator of the panel. The consensus is that mobile data is becoming more important to carriers and it’s growing every year. The next big challenge will be getting content to devices.

• Russ McGuire, Sprint
• Michael Woodward, ATT Wireless
• Frank Meehan, Hutchinson Whampoa/3
• Venetia Espinoza, TMobile USA, Inc.
• Satya Mallya, Orange Labs

Chetan: What do unlimited plans do to the number of people using a data network, and then will fixed pricing change things?

Michael, ATT: Trying to plan for capacity has been with telecommunications providers forever. We’re seeing quite a rise in data usage, but we’ve also intelligently built to be able to handle that. All we have is promises on up to 1.7 Mbps on the down and I think we’re well equipped to handle that. But I think if every single customer were streaming at every time it wouldn’t work, but that’s not a realistic scenario. So far, so good with capacity.

Russ, Sprint: From a revenue perspective, I think there are challenges and opportunities. You have to balance the revenue against the cost. For us the next time we come up with something great do we throw it into Simply Everything or do we add that as an additional service? Second thing is how do you manage the network. What can do as your network traffic begins to grow to manage the costs of carrying that.You can also move traffic off the network. So one of the things we’ve done is introduce a femtocell product to get that traffic off of the radio network.

Chetan: How does data from social networking to relate to voice?

Venetia, T-Mobile: We’re seeing lots of usage on social networks. Three times the picture sending and we believe innovation is coming through applications that has these social applications. Social networks are a key, key part of communicating and will transcend the mobile phone.

Chetan: Frank, are you crazy for adding VoIP to the network?

Frank, 3: The Skype phone makes us more margin than any other phone in pre-paid with the exception of the iPhone. About 65 percent of the UK market is prepaid and only 5 percent of those are using data. Smartphones are not as relevant. We also have a massive churn in prepaid in all markets where prepaid exists. So we basically told people, if you spend 10 pounds a month and top it off every month, you get Skype for free. That’s driven incredible loyalty to the device. We have a huge level of top-offs and we’re seeing growth on voice and text on those devices.

So we built everything into the address book and you’re always logged into Skype and everything is integrated so that ease of use is integrated, and that’s driving usage. It works and it’s very profitable for us.

Chetan: Can we also talk about UMA, video and what that means?

Satya: We have seen a change in user behavior. Calls originated at home can go on the mobile network with no additional costs. We have this new experiences in telecom and DSL customers, mobile customers and now IPTV. So what we offer are services tied to different networks. For example we have video on IPTV as well as on video on mobile and video on the PC. So subscribers get video across all three platforms. For example sports — we offer real-time sports across all three screens.

One of the major problems that is there in terms of customers is a variable data rate that may shock them as part of the service. So we have bundled data as part of the costs of a service, so if you buy music we bundle the cost of data into the price of the plan.

Chetan: Openness?

Venetita: We are very committed to an open network. We’re investing heavily with Google. In addition to the Android mobile phone we are also announcing the creation of our dev partner community and getting rid of some of the problems in getting applications to market. Historically, as carriers, we’ve been difficult to do business with. Through our dev partner community we want to be very transparent about working with T-Mobile. We’re publishing a rate card so people can see what our terms look like. We’ll also have a click-through agreement so you can just say yes and do business with T-Mobile. We hope that through the open platform with the Android phone and with this dev partner community we’re on our way to an open community. We’re hoping what used to take months (to get an app up) will take days.

Satya: When we have an all IP network it will make it all open.

Frank, 3: Openness means getting people to use the network. We spend billions building these 3G networks so we want people to use them. So we have good pricing plans on data and everything. There’s no point having 5 percent of the phones on our network using data, so we need to make it relevant for the mass market. As a carrier we need applications that apply right across our range. Developers need to remember that we have to sell this to customers in the store so it needs to be as simple and easy to access as possible.

Chetan: Openness on a WiMAX network? Is it different?

Russ: We need to open our network to devices like the Kindle, to applications as we have done for 10 years. We’re introducing new things to make it easier for developers. We introduced Titan, a full Java implementation we’re introducing across our entire portfolio of handsets, not just for smartphones. Openness is making it easy for innovation to happen so they can make it more compelling for the end user.

We also need to figure out how to get people to use this data. How do we free people from making choices about the devices and data. That’s all on the 3G side of the business. For Xohm, it’s a beautiful thing when you say you can build something from scratch and do it right the first time. For the 3G network we’re getting there incrementally.

Chetan: How is iPhone affecting your view of openness?

Michael, AT&T: To get people to use data we need to improve discoverability of data applications. That helps in mining the base. There’s another component of openness and that’s increasing the number of devices on the network, so it’s critical to have a standards-based approach to have innovations on devices.

Chetan: Where would you invest?

Michael, AT&T: Convergence. People are very loyal to where they keep their content. People might grow up around Facebook and MySpace and they are loyal, they want to take their application from there from device to device. People want to the same access across the board. Becoming agnostic across the network would be well placed.

Russ, Sprint: Carriers may not be the best ones to ID an applications space.

Frank, 3: We have operations internationally, so if someone gave me a mass-market handset that made the Internet relevant for everyone across our group that would be sweet. I need a new user interface.

Satya, Orange: Location is a very strong context in mobile and things that make life easy, where locations becomes the coloring in the terms of how you interface.

Venetia, T-Mobile: Ease of discoverability of applications both online and on the device.

In December 1994, I was managing the new product development process for a long-distance carrier. We were in the midst of being acquired, with the new combined company becoming a credible threat to the Big Three. My soon-to-be CEO asked for a review of the product development pipeline, about a third of which was Internet related. His response? “That Internet stuff –- shut it down. The Internet’s a toy, businesses will never pay for it. Shut it down.”

I lead with this story for two reasons. First, to remind us of how quickly things can change. Second, to set the stage for a much longer, still evolving story.

Was this guy completely out of touch with reality? No. In 1994, his opinion was very common and reasonably credible. In 1994, the telecom industry was dominated by long-distance voice. Local voice was a not-too-distant second. All data, including the small blip that was any form of Internet connectivity, was a very distant third. A tiny percentage of households accessed anything remotely resembling the Internet (think AOL, CompuServe, Prodigy) and concepts such as e-commerce and online advertising were beyond comprehension.

But, his comments were still shocking to those of us who saw the future. That evening, my boss, the guy on my team leading the Internet charge and I gathered over coffee at the local Village Inn and started drawing up plans for our exit. Early in 1995 we turned in our resignations and founded Digital Frontiers, the first professional web development firm in Oklahoma.

That year, everything changed. Most impactful was Netscape’s groundbreaking IPO, which attracted risk-taking innovation. But more lastingly, Yahoo was incorporated, Amazon sold its first book, and eBay held its first auction, all during one transformational year. By December, my partners and I had been vindicated and seemingly every business was dying to pay to be on the Internet.

And yet, getting on the Internet was still very painful by today’s standards. Our startup required a T1 connection at $1,200 per month and a $20,000 Sun server to host our web sites. The technician from the local Big Bell grumbled about the hassles of installing the 4-wire circuit, and I grumbled about having to figure out how to configure sendmail. For end-users, the choice was whether to go the easy route and get an AOL account or get a “real” Internet connection from a local dial-up provider.

Broadband options didn’t really arrive until scrappy startups like Covad, Northpoint and Rhythms Netconnections overcame Big Bell resistance to offer DSL in a handful of cities in 1997. Hosting options for startups, and certainly cloud computing options, were even farther away. But still, we were all proud of the way we were improving life at 28.8kbps! At Digital Frontiers, we partnered with a local hospital to introduce perhaps the first online newborn photos, and we partnered with Pennwell Publishing to create an online community for professionals in the oil and gas industry.

Looking at today’s dominant Internet properties and business models, it’s easy to see how mass market broadband adoption has fundamentally transformed those nascent attempts to revolutionize the world. In 1996, only 16 percent of American households had any kind of Internet access; by 2007, 86 percent did. In 1996, virtually all of the industry revenues were for access; by last year, advertising was nearly as big as access and e-commerce was in a class by itself. The world has changed.

But, what does this have to do with mobility?

I’m thankful to now work for a visionary telecom company. Sprint PCS was formed in 1995 on the promise of mobile data and Nextel introduced the first open GPS-based development platform in 2002, but we are probably at the equivalent of 2001 on the Internet timeline. Yes, there are again nay-sayers who argue that businesses should never pay for mobility, but we know the benefits that mobility is already delivering.

Innovative developers have introduced cool and life-changing mobile applications (BlackBerry, Telenav, and Loopt come to mind) in an essentially dial-up world. We’re a couple of years into ADSL-speed broadband, but not yet at mass adoption, and cable-modem-fast WiMAX networks are just around the corner. Mobile browsers, operating systems, and even carrier platforms are opening new windows for innovation.

I don’t know what this new revolution will bring, but I believe that mixing always-with-you broadband connectivity, location, presence, a device with camera/processing power/impressive display/touchscreen, push-to-x, and innovation will change our lives forever.

Join me at Mobilize to get a glimpse into that future.

Russ McGuire is Vice President of Strategy for Sprint Nextel, and the author of The Power of Mobility (Wiley, 2007). Russ blogs regularly at McGuire’s Law.

If this story interests you, check out our upcoming conference:
Mobilize — The Next Generation Mobile Conference

The four major mobile carriers have presented their 2008 second quarter financial results, and it’s really a tough time to be Sprint. We compiled a quick scorecard after T-Mobile USA reported its numbers this morning, so for an at-a-glance view of which added the most new subscribers (Verizon) or which makes the most money off of each subscriber (Sprint), see below.

AT&T reported Q2 earnings on July 23:

• Wireless revenue: $12 billion
• Wireless operating income: $3.1 billion
• Churn (postpaid only): 1.1 percent
• Net adds: 1.3 million
• Total subscribers: 72.9 million
• Data revenue: $2.5 billion
• Average ARPU: $50.60

Verizon reported Q2 earnings on July 28:

• Wireless revenue: $12.1 million billion
  
• Wireless operating income: N/A
• Blended churn: 1.12 percent, postpaid 0.83 percent
• Net adds: 1.5 million
• Total subscribers: 68.7 million
• Data revenue: $2.6 billion
• Average ARPU: $51.53

Sprint reported Q2 results on August 6:

• Wireless revenue: $7.7 billion
• Wireless operating loss: $142 million
• Churn (postpaid only): “just under” 2 percent
• Net loss: 901,000
• Total subscribers: 51.9 million
• Data revenue: N/A
• Average ARPU: $53.47 (excludes wholesale customers)

T-Mobile reported Q2 earnings today:

• Wireless revenue: $4.85 billion
• Wireless net income: $452 million
• Blended churn: 2.7 percent, postpaid 1.9 percent
• Net adds: 668,000
• Total subscribers: 31.5 million
• Data revenue: N/A
• Average ARPU: $52

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Mobilize — Mobile Web Today and Tomorrow

If you are a start-up targeting the mobile industry, then you are well aware of the slow moving ways of incumbents, equipment makers and of course handset makers. You are made aware of their equally glacial ways when you come from the opposite end of the spectrum, Silicon Valley.

Google, the Mountain View, Calif.-based search engine that is making a big mobile push via its Android Mobile Platform, is learning the realities of mobile business the hard way. A report in WSJ suggests that the company is experiencing delays to its so called launch which is now slated for fourth quarter 2008. (Somewhere in Cupertino, Calif., Apple’s Steve Jobs is having a good laugh!)

“This is where the pain happens,” Andy Rubin, Google’s director of mobile platforms told WSJ. “We are very, very close.” He was talking about adding features etc requested by carrier partners. I think this is why Jobs was smart in being tyrannical and ignoring carrier requests when it came to software. Google apparently can’t afford to ignore partner requests.

Here are the relevant and interesting facts from the WSJ article:

Again, as I said earlier - whimsical wishes of carriers, endless customization, software delays and of course, executive reshuffling - these are facts of life for mobile start-ups. Welcome to the club, Google.

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If you’re like me, sick of the double-crossing, bandwidth-capping ways of the in-the-red Sprint, it’s time for you to start thinking about other mobile broadband options. Of course, you can sign up for Verizon and pay premium dollars for the same 5 GB-a-month download cap and restrictions over their EVDO network. Or simply switch technologies and go to AT&T’s 3G Network, which is getting speedier and is as widely available as those offered by Sprint and Verizon.

AT&T said today that over the next month it will deploy High Speed Uplink Packet Access (HSUPA) technology in the six remaining markets across its 3G footprint, leaving it able to deliver 1.4 Mbps down and 800 Kbps upstream speeds. This will be an improvement over HSDPA technology (High Speed Downlink Packet Access), which is slower.

HSUPA puts AT&T on near-equal footing with EVDO-based mobile broadband sellers Sprint and Verizon. And it’s not stopping there — the company also plans to graduate to HSPA+ and then to LTE (Long Term Evolution) technology to offer even higher speeds for mobile broadband.

Sprint isn’t just losing millions of customers and billions of dollars, it’s in the midst of pioneering a new management philosophy. We’ll call it the Three-Megabit Monte. Similar to the venerable street con, this is where Sprint leads a customer down a confusing line of lies and inflated charges in the hopes of making a buck.

As detailed by Allen Harkleroad (who is one wrathful Southerner) on his web site, Sprint has been charging him almost four times the price of the amount it pays the local telephone company for two T-1 access lines. That’s about a 75 percent gross margin. But what really drove Harkleroad around the bend was being lied to by a Sprint salesman, who claimed that the company was charged $1,998 for the T-1s (the phone company, on the other hand, said it charges some $500). Harkleroad has since switched providers and pays about $1,500 less per month.

But he’s not done with Sprint yet. He figures the company owes him about $56,000 (for charging him so much), and he wants to get paid. Harkleroad also wants to encourage the rest of Sprint’s customer base on the access side to take a close look at their bills. And the icing on this cake? He alleges that Sprint charged him for providing 3 mbps download speed, but only provided 2.5 mbps, saying that the difference was lost to overhead. And that’s where the the Three-Megabit Monte philosophy gets it name.

For more examples of Sprint’s philosophy in action, check out this story, this story and this one.

In what looks like yet another blow to Sprint, Qwest said today it will resell/re-offer Verizon Wireless’ services to its customers in a four-play package. Residential customers will be able to choose wireless only and be billed directly by Verizon Wireless, or include Verizon Wireless service as part of a Qwest bundle with their home phone, Internet and video services and receive one bill from Qwest for all of them.

When I asked Qwest CEO Ed Mueller back in March if they would buy a wireless operator like Sprint, his answer was no. “All we want to do is partner with a national wireless player where we can rebrand and remarket their service to our customer base. We are ambivalent about the technology but we want a partner with retail presence,” he had added. The quid pro quo of the deal: Verizon and Qwest will partner up and bid for government contracts, a very lucrative business indeed.

Sprint’s delay in launching its Xohm WiMAX service will cause problems for the carrier, but shouldn’t be read as the demise of WiMAX as a 4G mobile broadband standard, according to the inaugural report issued by Sidecut Reports. Sidecut is a research firm headed by Paul Kapustka, the former managing editor for GigaOM.

Kapustka points out the technology’s growth in developing countries that are building out new infrastructure, as well as its potential as a possible alternative to copper for competitive local exchange carriers. So while WiMAX may not be big in the U.S., if Sprint can’t get Xohm up before the other carriers launch their 4G LTE networks, the technology itself should still prove attractive around the rest of the world, according to the report.

Will consumer adoption of unlimited mobile plans cause your call quality to suck? ABI Research seems to think so. In a report released today, ABI Research says unlimited plans can lead to more phone calls, more data use and worst of all, more YouTube-related video streaming. And that leads to more of a burden on wireless networks and backhaul. Since Sprint’s unlimited plan includes 3G data as well as voice, it may be the canary in the coal mine for other carriers waiting to see what unlimited means for their networks.

When it