Whither WiMAX?

The wait for a U.S. commercial launch of the new WiMAX mobile broadband technology may finally be coming to an end.

Struggling Sprint Nextel has repeatedly pushed back its planned launch of the Xohm WiMAX service, as it tries to line up funding for the venture. The company, after months of wrangling, is closing in on an agreement that would spin out the business and merge it with a similar service being offered by Clearwire. An announcement could come as early as next week, according to people familiar with the negotiations.

The combined venture would receive at least $2.5 billion in additional funding from cable outfits led by Comcast, Internet search company Google and chipmaker Intel.

The companies are racing to deliver on the promise of offering blazing-fast Web connections to all types of mobile devices and consumer electronics. They’re also hoping to get a jump on AT&T and Verizon, who are promoting a rival but similar so-called fourth-generation wireless technology called Long Term Evolution, or LTE. That technology is said to be about two years behind WiMAX in development—and it has not yet gotten the broad device support pledges like those from Samsung, Motorola, Nokia and others in the WiMAX camp.

The first WiMAX devices will likely be USB dongles, PC Cards, and home modems, followed by ultramobile PCs (UMPCs) and portable media players such as Nokia’s N810 tablet.

Even so, WiMAX faces many hurdles. The technology has been operating on a soft launch basis in Baltimore, Chicago and Washington, D.C., but has yet to be proven capable of handling heavy network loads. Sales and marketing will be just as important to educate consumers about the largely unknown technology. It’s also still not clear what the executive structure of the new Xohm will look like, nor just how much influence Google and the cable outfits will have over strategic direction.

Sprint also has its own troubles that could derail WiMAX if the deal does not conclude as soon as expected. Sprint has struggled with massive subscriber losses and weak financial performance since it bought Nextel in 2005. It expects to lose millions of subscribers this year. Rating agency Standard & Poor’s, a McGraw-Hill sister company to BusinessWeek, today cut Sprint’s $22 billion in senior unsecured ratings and corporate debt to junk bond status.

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