When Sprint already owns a nationwide network capable of generating $90+ month ARPU (like AT&T's iPhone with EDGE) why should Sprint or any investor risk $15 billion dollars of cash and assets to begin a multi-year build-out to produce ARPU several years in the future that's roughly one third (as CLWR does) of what Sprint is capable of generating in 2008?
If CLWR can't offer a compelling business rationale for this, all the talk of JV's and big deals is a waste of energy.
ARPU only refers to revenue, not margins, so no argument was made on that topic. But as margins are critical to the larger economic picture its worth addressing.
If one has spectrum to spend for a new service it is financially optimal to generate the highest revenue per hertz [ greater revenue for the same CAPEX ] as possible. On that measure it is better to deliver more voice at $30/month revenue for 13kbps bandwidth, than $35/mo requiring 5+ Mbps bandwidth. In this respect the voice service is hundreds of times more profitable than the data service.
If Sprint were optimizing for profitability a strategy of using some of its spectrum to replace consumer fixed voice services would be one of the first options it would consider.
The payout of $90 won't last. The economy of 2 years ago is not the same as today. Recessions do occur. People pull back on unnecessary expenses.
Given the costs incurred by Sprint (and other network providers), the profit margins are NOT as great as one may be lead to believe. And Clearwire's lack of marketability for WiMAX means little, if anything, when it comes to SprintNextel.
So, if customers are going to opt to not pay for such expensive services, then either one starves (and ultimately dies), or one innovates. Sprint has chosen the latter. WiMAX offers Sprint an advantage in that operating a WiMAX network should significantly reduce their operating costs by several magnitudes. That's VERY compelling, in and of itself.
Now, factor in that such cost savings can also be offered to the customer, and you have just created a new and better mousetrap. Sprint can lower its operation costs, trim its customer acquisition costs to $0, offer lower usage rate plans to the customer, and end up generating better profit margins.
The argument for going WiMAX isn't questionable at all. What is questionable is whether Sprint can manage to run Xohm properly. Letting Barry West run Xohm is smart. Replacing Barry West would be insanely stupid. So, the future of Xohm and Sprint rests not so much with Dan Hesse as it does ultimately with Barry West.
Its not a valid argument to suggest $90/mo ARPU will not hold due to recessionary forces without also accepting that CLWR's data-only WiMAX model [with pre-WiMAX technology] will also fall if the same forces apply.
The relative 3:1 difference still underscores customers willingness to pay more for single handset voice & data, even if the data trickles out at 264 kbps.
The business case for a data-only service, including WiMAX, is indeed questionable when the data shows converged services are what customers want, and Sprint already has the EV-DO network and handsets to satisfy its demand for the next year or two, or roughly 2010 when LTE will be available.