Betting Billions On WiMax

An unusual alliance of tech and media companies is betting billions of dollars on the as-yet-unproved technology known as WiMax. Will they finally usher in the wireless Web? Or is this fated to be another one of those cumbersome tech alliances that go down in flames with technology that doesn't work?It is tough to bet against Google, Intel, Comcast, Time Warner, Clearwire, and Sprint, which today announced they are putting together a deal that some value at around $12 billion to build a nationwide, high-speed wireless network. Intel, in addition to its dominating position in the chip market, also was the company that introduced Wi-Fi to the world by adding it to every new PC chipset and certifying wireless hotspots in cafes, hotels, and other public locations. If Intel is involved, that's a good reason to be optimistic. The company plans to add WiMax technology to laptops and other mobile Internet devices.

The cable TV companies are looking for a wireless service to add to their TV-voice-Internet bundle to better compete against Verizon and AT&T, so it's obvious why they're participating and investing $3.2 billion, according to the Sprint announcement. And GoogIe sees this as another avenue for selling ads. Sprint and Clearwire have been big promoters of WiMax, but their on-again, off-again, partnership didn't have money or the clout to make it happen themselves. Now, this new coalition can provide the cash and the distribution channels to ensure this effort has a decent chance of success.

But wait a minute. Does WiMax really work? Can it provide the faster speeds and broader coverage to make it the new and improved Wi-Fi? That is still unclear. One of the first operators of a WiMax network calls it a "disaster" and says it "failed miserably" in Australia, according to a report by our Eric Zeman.

Buzz Broadband CEO Garth Freeman told a conference recently that "WiMax may not work." His complaints: non-line of sight performance was "nonexistent" beyond just 2 kilometers from the base station; indoor performance decayed at just 400 meters; latency rates reached as high as 1,000 milliseconds; and the high latency and network jitters made WiMax unusable for many Internet applications, including VoIP.

Critics say Freeman's had problems because he built a network on the cheap. A piece in the Sydney Morning Herald says Freeman under-provisioned his network and that's the reason for its poor performance.

The new company being formed will go by the name Clearwire and will be run by Craig McCaw, a guy with a pretty long track record of success in the wireless industry. The combination of Intel and McCaw makes me think that WiMax will eventually work and the long-promised wireless Web will appear. But deployment of new technology never happens as quickly as promised, as we've seen time and time again.

I hope that WiMax is real and does what it promises. As a professional skeptic and cynic, I have my doubts. But I now think it has a fighting chance to develop into something really useful -- and perhaps even important.