Sprint's partnership with Clearwire for WiMAX will create an expansive network, blanketing almost every populated area of the country if all goes according to plan. But in exchange for those economies of scale, its speed to market and the optimization of spectrum assets, Sprint is changing up its original business plan.

Instead of the wholesale business plan that Barry West, chief technology officer and 4G president for Sprint, has been evangelizing for the last year, Sprint will be a service provider of record offering a joint, separately branded broadband access service with Clearwire-dubbed Xohm by the companies last week. Sprint hasn't ruled out the wholesale model entirely. In fact, it said it will take the lead in pursuing mobile virtual network operator (MVNO) agreements over both it and Clearwire's portion of the WiMAX network. But for the initial launch, the Clearwire-Sprint partnership appears to follow the standard telecom business model: broadband access for a monthly subscription fee.

Sprint and Clearwire officials said the details of the agreement are still being worked out as the two await regulatory approval. But as laid out in the companies' letter of intent, Sprint would build out a mobile WiMAX footprint covering 185 million people, focusing primarily on the major metro markets, while Clearwire would build in the smaller metro areas and rural markets, laying a footprint covering 115 million people. In some areas the companies would exchange spectrum to prevent overlap between markets. The two also plan to launch a jointly branded service, the name of which has yet to be revealed. While customers could roam between the Sprint and Clearwire networks, each company would be responsible for provisioning and servicing customers in its own territories.

How wholesale would fit into the two companies' combined business plan is among the items still being fleshed out, but there are definite opportunities for Sprint in the untapped market. In addition, its agreement doesn't preclude Sprint from striking deals with third parties, said Don Stroberg, vice president of 4G sales and distribution for the company. While Sprint will take the lead in any wholesale service offering, Clearwire stands to benefit as Sprint's reciprocal roaming partner. Deals could take the form of an MVNO where another ISP offers full broadband access over the network, or they could be more specific arrangements, such as a photo storage service or a camera manufacturer selling digital file uploads to its customers in per-picture bundles, he said.

“We're still working out the pricing, but the business model for this kind of service could be very unique,” Stroberg said. “With wholesale, the access could be bundled with the product itself.”

Sprint isn't the only partner adjusting its plans to form the partnership. Clearwire's current business model of launching a fixed broadband access network is now rapidly evolving into a full-blown mobile access network, complete with national roaming. Mobility was Clearwire's plan all along, but the deal with Sprint is getting it there faster. In fact, part of the agreement allows Clearwire to bundle Sprint cellular voice and data services along with WiMAX broadband. But given that the two companies are starting from opposite sides of the WiMAX equation, Sprint and Clearwire won't just have to converge their business plans; they have to converge their network architectures. Motorola — a vendor for both companies — is currently designing two separate architectures to meet Sprint and Clearwire's specific needs: a kit that optimizes uplink and downlink speeds for Clearwire's fixed and nomadic customers, and a kit that maximizes the transmit range so access points can be co-located with its existing CDMA cell sites.

As Clearwire originally hoped to build a broadband access network, its network planning more likely takes different power levels, cell site positioning and customer premises equipment (CPE) requirements into consideration than Sprint's to allow its signals to penetrate into the homes it planned to target, explained Lars Johnsson, vice president of business development for WiMAX chipset maker Beceem. Meanwhile, Sprint planned a network using its current CDMA footprint that is designed to support full mobility, which may not have taken into consideration the indoor penetration requirements crucial to Clearwire's business model. If Sprint continues to focus on mobility while Clearwire focuses on access, the two may have to find a happy medium on a network design to ensure that performance doesn't suffer as customers roam between the two networks.

“Indoor coverage is more important in a fixed environment, while handoff is more important in a mobile environment,” Johnsson said. “While mobility probably won't be a problem on the Clearwire network, Clearwire may have a challenge in focusing on home access in the Sprint network.”

Talk of mobility vs. access may be moot, however, at least at this early stage, said Ranjan Mishra, a director for strategic consulting firm Oliver Wyman. It will take years before either Clearwire or Sprint's network is built out to the density that will support the almost universal coverage that people now associate with mobility. And the initial WiMAX terminals will start out as separate CPEs and move to data cards and embedded laptops, meaning most people will be using the service in fixed or nomadic scenarios. Sprint has plans to introduce dual-mode CDMA/WiMAX networks, but those devices will fall back on the much more pervasive CDMA network if they lose a WiMAX signal.

Even if Sprint espouses mobility and Clearwire promotes access in the beginning, the initial services will be access-oriented in nature, Mishra said. Yet Clearwire has left no doubt that it plans to migrate its access service to full mobility, which puts both companies on the exact same track, Mishra said.

“Mobility is the end-goal, no matter where the individual companies are starting from,” Mishra said.

SPRINT AND CLEARWIRE'S WIMAX PARTNERSHIP

Sprint will build out its network in major metro areas, covering 185 million people.

Clearwire will build its network in smaller metro markets and rural areas, covering 115 million people.

The companies plan to cover 100 million people by the end of 2008.

Both will offer reciprocal roaming to each other's WiMAX customers.

Retail service will be under the Xohm brand, but Sprint will market, provision and service the customers in its own territory; Clearwire will do the same.

The companies will exchange spectrum in markets where they overlap, bolstering available capacity in those markets.

The agreement is for 20 years with options to renew it up to 30 more years.