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October 12, 2006

WiMax World: New business model

Posted by Tricia Duryee at 11:21 AM

BOSTON -- Based on explanations offered at WiMax World this week, an entirely new business model is forming around the technology Sprint Nextel is so eager to implement.

The model is called open Internet access, and it provides a simplier structure than the cellular industry has today.

Today, cellular operators act as gatekeepers, approving every application and all the content available on a phone. The result can be less innovation. But WiMax is attempting to build simple cost structures and an open platform for any developer.

What that means is a much faster pace of innovation. For cellular handset manufacturers, such as Nokia and Motorola, it also means a chance to produce new consumer products outside of their traditional domain -- phones.

Fred Wright, senior vice president of Motorola, said it's exciting.

He compares WiMax right now to the early 1980s when the cellular industry was just taking off. He remembers one of the main industry events held at the Westin in Palm Springs that had a very similar vibe as this week's WiMax World in Boston.

"It is deja vu all over again," he said. "In looking at the cellular industry, I expect the same thing to happen with WiMax."

With that big of a future expected, he said: "There is a huge transformation opportunity for Motorola, It will be a rebirth of our company and all the products we can bring to market."

Nokia, the largest handset manufacturer in the world, had the same thing to say.

It held up its Nokia Tablet 770 as an example of something that could be developed for a WiMax network. Today, the device, which is about the size of paperback book, has Wi-Fi and no chip for a phone and runs on Linux.

Mark Slater, Nokia's vice president of sales and marketing for North America, said he believes the devices that will use WiMax first are laptops. Then, he says he sees all sorts of devices that won't necessarily be a phone or even be capable of making voice calls.

A lot of this innovation will be supported by the new business model. In the open Internet model, he said, operators will stop subsidizing the price of a phone, which is good for Nokia. Now he said the value of the device can stand on its own, and people don't expect it to be free.

"We are excited about the open Internet model," he said. "We are in favor of no subsidizes.

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Tricia Duryee
Tricia Duryee
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Kristi Heim
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