WiMax Taxis for Takeoff

When you buy a notebook computer today, you don't request that it include WiFi (IEEE 802.11x) support. The same is true for a USB port on just about any computer. They have become standard features that are built in, not added on. And when you take that notebook into a hotel, convention center, airport, your neighborhood brew pub, McDonalds or wherever, that WiFi connection works.

Next year you're going to see that same process that Intel initiated years ago with WiFi start taking place with WiMax on notebook computers. And shortly after that, it will start on many other types of consumer electronics devices as well. That's what makes Tuesday's announcement of a nationwide WiMax network important.

The creation of a new Clearwire (CLWR - commentary - Cramer's Take) through the combination of the 2.5 GHz spectrum assets of Sprint (S - commentary - Cramer's Take) and the current Clearwire, along with a few billion dollars from their close friends, is an important stake in the ground for a couple of reasons.

First, given the network's assets, it starts with scale. The new Clearwire will commence operations with 40 billion MHz POPs, the largest spectrum position of any carrier in the US. Furthermore, those assets are concentrated in the top 100 markets, not 50 miles from the nearest paved road.

Second, at least from a planning perspective, the network roll-out is aggressive. They expect to have 120-140 million covered POPs by the end of 2010. If they achieve that target, they'll be at least a year (they claim two years), if not more, ahead of LTE (Long Term Evolution), the cellular alternative.

Lastly, the WiMax network will not be operated like the traditional cellular networks we all use today. For most users it will be a BYO network, just like a lot of restaurants you frequent. Rather than buying a subsidized device from a carrier and being locked-in for a number of years (to recoup the subsidy), you'll buy your notebook, MP3 player, iPhone or whatever from the same places you acquire them today. The only difference is that they'll support WiMax.

---

At time of publication, Faulkner had no positions in the stocks mentioned, and the Telecom Connection Model Portfolio is long ClearWire.

Bob Faulkner has been in the investment business for 18 years with an exclusive focus on technology stocks. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Faulkner appreciates your feedback; click here to send him an email.

Interested in more writings by Bob Faulkner? Check out his newsletter, TheStreet.com The Telecom Connection. For more information, click here.