Sprint-Nextel Stockholder Battle Looms: 1% Holder says “WiMax Too Much Too Soon!”

April 12th, 2007 by Barry Caplan | Tags: , , , , , , , , , , ,

Welcome to WSJ Deal Journal readers who followed my comment on today’s story:

The Wall Street Journal reports:

One of Whitworth’s primary gripes with Sprint Nextel (reported first in this Wall Street Journal story today) is the billions of dollars Forsee is spending on a so-called WiMax wireless high-speed data network, which a number of the company’s investors call an excessive amount for an unproven product.

I like to talk about Finance, Content Production, Distribution, and Exhibition (meaning end-user consumption) as the required legs of any DigiMedia strategy. Let’s look at Sprint’s case here.

Telcos are in a prickly spot, but wireless companies such as Sprint should be changing their perspectives of themselves. They should see themselves as possible prime players in new forms of digital entertainment, including person-to-person use of discretionary time.

This clearly means *embracing* Wimax and similar IP based technology, not sticking their head in the sand.

After all, if someone else builds Wimax, why will I need my Sprint phone (and I have one!) any more at all?

Sprint’s cell network is going to be obsoleted soon (as are all cell networks), the issue is weather it will be obsoleted by someone else or by themselves.

My own feeling is that Sprint and the others probably have leases and other valuable real estate in their towers. What they need is a vision (no pun intended) about how to monetize that when the ability to bill customers monthly or for bandwidth starts to go away.

Other companies, particularly Google, and other internet advertising aggregators are inventing new ways to make money from seemingly nothing, just as sure as the railroads did in their day. Google is already experimenting with building out free wireless networks – not Wimax yet, but they can afford to play a while and gain experience.

So Sprint and probably its kindred wireless telcos decide to not live up to the wireless part of their moniker. Sprint attempts to just broadcast via their network instead of inviting its customers to actually use the network for what they need. There is no ability to use Java applications on my otherwise nice Samsung A900, and I still have a year to go on my contract.
I think Sprint should consider these strategic goals in the very short term, or be eaten alive:

  1. Build out that Wimax network as fast as possible.
  2. Replace all smartphones with Java-capable models ASAP, and then roll out Java-capable replacements for the cheaper phones immediately after. This should be done at no direct or indirect cost to the account holders.
  3. Implement gateways from Wimax/Voip to the phone system.
  4. Plan to monitor traffic rates over IP, including voice. Notice how usage patterns will move away rapidly from phone calls and braodcast of content, to VOIP applications and interactive content sharing of one sort or another.
  5. Adjust content partnerships accordingly.
  6. Package company for a sale to Yahoo, Google, or arguably even eBay who want to have a more direct relationship with the end user, and have indirect ways to monetize that relationship that Sprint seems incapable of noticing.

In this way, Sprint has a future value, at least as far as its stockholders are concerned. Otherwise, there is no reason to expect Sprint to be around in a Wimax world at all – others will provide the network, others will provide the phones, and others will provide the content. What is left after that?

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