Sprint's huge gamble gets closer, more perilous

Sprint will either succeed wildly with its WiMAX initiative or fail miserably and become a takeover target. There doesn't seem to be much middle ground.

I came to that conclusion while working on a special Knowledge Center feature on international wireless data connectivity for the print version of Computerworld, which appears this week. In my part of the package, I discuss the confusing welter of future wireless broadband technologies. The flavor of mobile broadband that we're closest to seeing is mobile WiMAX and Sprint's effort is currently the largest deployment in the world, by far.

Sprint says it will begin offering the service in two cities -- Chicago and Washington, D.C. -- later this year and, when the deployment is complete, the company will likely offer faster, cheaper nationwide mobile wireless broadband service than its competitors. Because they don't have enough spectrum, Sprint's competitors won't have any chance to catch up for a minimum of two years, probably more.

Sprint's mobile WiMAX effort is made all the more urgent because of the company's faltering cellular voice business. But therein lies what may be Sprint's biggest challenge: its need to succeed. As my colleague Matt Hamblen correctly pointed out the other day, if Sprint's shareholders panic and Wall Street analysts become too demanding, Sprint could be forced to take the steps demanded by those two groups aimed at making the WiMAX investment pay off quickly. If it succumbs to that pressure, Sprint could blow it.

That's because the pressure could lead Sprint into demanding too much from its customers, such as unduly high prices and long-term contracts.  Such abuse is the norm in the cellular industry and has led to significant profits, which would please shareholders and Wall Street.  However, it would scare both individual and enterprise users away from this promising new technology.  After all, most users can simply wait until they reach a Wi-Fi hotspot or return home or to the office.  Put differently, Sprint must keep the barriers to entry low or the chances of its success will diminish.

I've spoken with Sprint executives and they are aware that they they must avoid the complexity and high prices demanded by cellular operators, including themselves. It's also obvious, though, that they are under a lot of pressure. Balancing these varying needs is Sprint's true challenge.  Its mobile WiMAX effort could well lead us into a future of fast, ubiquitous access and it could resurrect Sprint.  But that will happen only if Sprint holds the pressure at bay.