David Haskin

The gutsiest mobile and wireless companies of 2006

By David Haskin
December 22, 2006 9:48 AM EST
The technology world is full of innovators, but here's a small salute to two companies that exemplify a trait not found nearly so often: boldness.  Those two companies, EarthLink and Sprint, took action this year that could pay huge dividends -- or lead to their demise.

That thought occurred to me in the last week after EarthLink rolled out two more more city-wide Wi-Fi systems (in New Orleans and Milpitas, California) and an analyst described Sprint's plans for a nationwide mobile WiMAX network "the coolest and wildest and most risky gambit we've seen in the wireless industry in quite some time."

Both companies have changed direction and taken big risks because, well, they had to.  For instance, EarthLink, as an executive for the company explained to me not long ago, was a dial-up company that could not compete in a DSL and cable world.  It had to do something or it would slowly fade away.

The answer: Jump on the municipal Wi-Fi bandwagon, which it is doing successfully -- so far -- by installing and running  a number of municipal Wi-Fi systems.  Instead of losing its dial-up customers in, say, Philadelphia to Verizon's DSL, it now can compete against Verizon. Whatever you think about muni Wi-Fi projects, more competition can only be a good thing in an area -- broadband -- where there is precious little competition.

Sprint's situation wasn't yet as dire as EarthLink's, but it probably would have become dire in the coming years.  The company currently is nicely profitable but is in third place among U.S. cellular operators.  If the current trajectory of the cellular business continues, Sprint would likely have an increasingly hard time competing against the two giants ahead of it: Cingular and Verizon Wireless.

Sprint has an incredible asset, however, that its competitors don't have: A wealth of licensed spectrum it inherited when it took over Nextel.  The FCC told Sprint to use the spectrum or give it up.  Giving up that spectrum would likely mean it would end up in the hands of its competitors, which would have made it that much harder for Sprint to compete in the future.

Many analysts complain that Sprint's mobile WiMAX network, at $3 billion, is too expensive and is redundant with its EV-DO cellular data network. Perhaps, but these analysts don't seem to understand how little $3 billion is when a company like Sprint is about to be overwhelmed by larger competitors like Verizon and Cingular.  

It's hard to know if Sprint's mobile WiMAX network will succeed, although I have to say that I'd be sorely tempted to subscribe to a nationwide mobile data network that likely will be half as expensive and twice (or more) as fast as cellular EV-DO.  And it's hard to know if EarthLink can flourish and grow providing large-scale Wi-Fi in a bunch of cities instead of dial-up nationwide.

But my point isn't the likelihood of success but rather that Sprint and EarthLink saw difficulty ahead and, instead of waiting for hard times to hit before they panicked and changed course, they took bold action when opportunities presented themselves.  Shockingly few companies have the guts to take such action even though, for many of us, it seems like a logical approach.  For that, EarthLink and Sprint get a nod for being the gutsiest mobile and wireless companies of 2006.