Sprint Nextel to form network with WiMax

Sean Maloney, executive vice president for Intel, said Sprint's involvement could drastically increase the technology's adoption.  "Ethernet created business computing," Maloney said. "Wi-Fi has changed all sorts of things. What we believe here is that a single high-speed wireless standard all around the planet is going to change everything again."

The network will take advantage of Sprint's extensive holdings of 2.5-gigahertz bandwidth spectrum covering 85 percent of the nation's 100 largest cities.

Sprint officials said they chose WiMax after evaluating several other potential technologies, including those developed by Qualcomm Inc. and IPWireless.  They said WiMax was superior in terms of speed, cost and compatibility with its spectrum.

WiMax also is not tied to any one company, meaning Sprint can negotiate with a wider range of suppliers for equipment and services.

Analysts were largely supportive of Sprint's choice of WiMax, but said it's a big gamble to invest heavily in a network aimed at data services, which still represents a small percentage of wireless revenues.

"We are concerned that Sprint Nextel may find itself on the bleeding edge, rather than the leading edge, of this 4G network build, given our cautious stance regarding consumer demand, and that positive (returns on investment) may not be seen anytime in the near future," wrote Stifel Nicolaus analyst Christopher King in a research note.

Charles Golvin of Forrester Research was a little more optimistic.  "I think what Sprint is betting on is that consumers are increasingly going to rely on the service they get at home for Internet to be on their mobile devices," he said.

Forsee said Sprint is committed to upgrading the current network but needed to make a decision on the next generation to keep its competitive edge.  He estimated the company's bandwidth gave it a 12- to 14-month head start on rivals.

He also dismissed concerns that investors have not always rewarded companies that make major investments in new technology, such as Verizon Communications Inc., which has been hammered for building a vast fiber-optic network to deliver video programming.

"If we were to squander our speed-to-market advantage, that would be a terrible decision to make," he said.

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