A nationwide WiMAX network for the US is now a strong likelihood. The new, improved Clearwire has the money, the partners and the will to make it happen. But will it be a wireless breakthrough or a white elephant?

The announcement that a new company called Clearwire is to bring nationwide broadband wireless to the US is certainly good for one group. Many infrastructure vendors will be thrilled to know that a project of this size is now going ahead. But what does it mean for Sprint and Clearwire, whose recent decision to combine their two WiMAX networks brought the new Clearwire into existence?

And what does it mean for the raft of other players involved – Intel, Google, Comcast, Time Warner Cable and Bright House Networks – who have invested over $3bn (so far) and who, between them, will take a 22 per cent share of the company compared to Sprint with 51 per cent and Clearwire with the remainder?

One network is better than two, says Amrish Kacker head of Asia for research and consulting group Analysys Mason. However, he adds: “Whether one network is viable is really the question now”.

Certainly for Sprint, spinning off its wireless broadband operation into a partnership is at the very least a useful way to calm investors. Michael Thelander, CEO of Signals Research Group, a US-based research consultancy, explains: “Sprint’s going through some very tough times now and investors are beating them up on trying to improve their core business. So I think it was a prudent move for Sprint to partner with somebody else and let them bear the financial risk.”

Intel’s involvement isn’t too difficult to understand either: it too is a WiMAX pioneer, albeit in the chip area. However, for Richard Webb, directing analyst, WiMAX, wifi and mobile devices with market research and consulting firm Infonetics Research, the involvement of the cable community as partners and, through wholesale agreements, service providers may be the most important part of this deal. Not only is there something in it for them – a way to take their services into the broadband wireless arena in a triple or quadruple play – but they have something to offer too. “The cable guys bring a solid customer base, triple play experience and content,” he says. TV and VoD over WiMAX perhaps? Why not? There’s a lot of bandwidth there to fill.

Google, by contrast, may be looking at the network as a stage for its Android OS. It will also be nominated search provider and a preferred provider of other applications, a point Thelander finds ironic. “Google was fighting for open access [in the US],” he reminds us. “If Google’s the preferred supplier they may be no different from what happens today when operators have their tightly held applications and services.”

Still, we may have to wait to find out. This network won’t be built overnight; initial estimates suggest coverage of 120 -140 million people by 2010. However, Thelander points out: “If you built out all the dense areas in the US and went outward to 150 million people, you would be covering a single digit percentage of the US landmass.” Thus, if his view proves correct, broadband data on the move may be restricted to cities for a while, and need the support of Sprint’s EV-DO network elsewhere, for which, of course, appropriate devices will need to be made available.

Bad news? Not necessarily, says Webb. “Mobile WiMAX will sensibly try to go after big city populations – and there’s a lot of mobility than can be achieved in a city the size of New York.” For him what matters is less perfect coverage than to “to get people starting to  use it…once people see what WiMAX can do there’s a very good  opportunity for the new Clearwire to steal a march”.

But what will people do with it? As Thelander points out: “There has to be something driving subscribers first of all to the WiMAX network and second get them to do lots of data transactions.”

But Webb feels we shouldn’t be tied to conventional notions of what WiMAX could offer. “There’s many different ways you can create revenue from mobile broadband,” he argues. His list includes iPhone-like devices, online gaming devices, telemetry, agriculture, utilities, construction, machine to machine – even WiMAX-enabled cars.

And, reminding us of the Google connection, Amrish Kacker adds: “There’s a huge opportunity – theoretically – around advertising. Going from one broadband connection per household to the equivalent of three, four or five broadband connections per household gives you a lot more eyeballs.”

Business models are one thing. You need to roll out a network first and that isn’t cheap at 2.5GHz. Here, however, says Thelander, Comcast and Warner bring a very valuable asset to the table. “They were involved in the 2006 auction and acquired a near-nationwide chunk of spectrum at 1700MHz,” he explains. “When you want to build out a large footprint [at 2.5GHz] it becomes very expensive. If you do 1700MHz the economics of extending your coverage become far more attractive.”

But it is not clear that this spectrum is going to be used, let alone whether 1700MHz could help to solve the deep in-building coverage problem that would be a major challenge for WiMAX at 2.5GHz. Here again cellular – or wifi – support may be required.

And what of rumours that Sprint-Nextel could be bought? If a new owner gave up on WiMAX, it would, says Thelander, at the very least hit capex with Sprint-Nextel sites no longer available for base station rollout. Also, he suggests, the loss of the Sprint brand name would hurt as fewer Americans have a clear idea what Clearwire is.

Webb, however, thinks this unlikely, not just because a new owner would need deep pockets to get out of the Clearwire deal but because WiMAX is, in his view the exciting part of Sprint right now – it’s the CDMA network that’s suffering. “Sprint and Clearwire will now get this network built,” he says. “There was uncertainty about that six months ago.”

Meanwhile, waiting in the wings, and supported by AT&T and Verizon, there is LTE. It may not arrive on schedule but it will almost certainly have bigger numbers. As Thelander says: “Ultimately LTE is going to be the dominant standard.” However, he adds, in the US that may not matter. “It’s an awfully big market out there and even if WiMAX only captures a small double digit percentage of that, it’s still going to  be significant.”

But that may not be the point. Or as Thelander puts it: “When I look at this whole relationship and what Sprint’s trying to do it’s really not a question of WiMAX vs LTE. It’s really a question of is there a business case for broadband wireless?”