WiMAX Could Reshuffle Telecom's Leadership

After a year of chaos, Sprint Nextel (S - commentary - Cramer's Take) and Clearwire (CLWR - commentary - Cramer's Take) managed to sew together a fascinating quilt of companies that want to build a new kind of mobile data market.

The new WiMAX alliance has a variety of motives, but the main thrust is an attack clearly aimed at AT&T (T - commentary - Cramer's Take), Verizon (VZ - commentary - Cramer's Take) and major mobile-handset vendors.

The success of the venture likely depends on the quality of the devices, of course, but new pricing models may be the most important factor here. Intel (INTC - commentary - Cramer's Take) and Google (GOOG - commentary - Cramer's Take) could be the big winners.

Smaller-Scale Services

It's clear that Google is vexed with the near-monopoly that AT&T and Verizon are developing in the U.S. mobile data market -- its decision to back WiMAX may be linked to its desire to experiment with ad-driven mobile services.

The big mobile operators are wedded to the old business model of locking consumers into long-term contracts that are relatively expensive and combine a vast array of features such as voice calls, texting, application downloads, long-distance calls and international calling. These big operators don't have much appetite for pioneering low-cost, targeted mobile data service -- the kind that would be ideal for ad-supported business models.

Tightly focused, small-scale mobile services -- such as downloading pictures from a digital camera or camcorder directly to a Web site, using a compact tablet as a laptop replacement and a VoIP phone for light browsing and low-cost voice calls, syncing GPS devices and gadgets to gather medical information seamlessly with your computer on the road -- aren't necessarily compatible with a heavy monthly service product that locks a consumer into a one-to-two-year contract.

Some of these small-scale services could well undermine average-revenue-per-user trends of mobile operators. Some of the miniature services might be run purely on ad revenue. Some would need a flexible model that might combine small one-time charges, ad subsidies and/or small buckets of service.

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At time of publication, Kuittinen had no positions in stocks mentioned, although holdings can change at any time.

Tero Kuittinen is managing director and senior analyst for Avian Securities, a brokerage firm specializing in technology companies. Although Kuittinen is an employee of Avian Securities the statements above are being made in Kuittinen's personal capacity and are in no way are the statements of Avian Securities, nor attributable to the company. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Kuittinen appreciates your feedback; click here to send an email.