In August, The Wall Street Journal wrote that Sprint will spend $5 billion on WiMax roll-out. Sprint has successfully convinced its infrastructure partners (SamSung, Motorola, Nortel) to go along with this new development. While this number does look big, compare this to the cost of Verizon’s FiOS cost of $1 billion or 1 million households, for a total of $23 billion (and there is no mobility). The market is not happy about the spending but there is no other option for these two players but to move in this direction given Comcast’s lead in sending a big data pipe to our homes.
Fortune magazine’s analysis of Verizon’s investment states,

Though it will take years for Verizon to recoup the cost of deploying FiOS to customers’ homes, the alternative would have been even less appealing: “They now get $95 a month from me, up from $60,” says Daniel Berninger, a telecommunications analyst with Tier1 Research, who has both FiOS and Comcast broadband in his Annapolis home. “Without FiOS, I would have gone to Comcast exclusively – and Verizon would have gotten zero from me.”

What is said about Verizon is true for Sprint’ WiMax investment and at&t’s U-verse investment. As Verizon’s CEO said, “You have to spend money to make money”.

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