SprintNextel, the third-largest mobile service provider in the United States, said Tuesday it will build a high-speed data network based on WiMAX, an emerging broadband wireless technology.

The announcement will undoubtedly shake up the WiMAX product supply market, which has been in a kind of holding pattern as the rapid emergence of Wi-Fi and cellular data services have dulled the general excitement that had built up around WiMAX.

It is a significant commitment by one of the world’s largest and most respected wireless operators. While it bolsters the standing of WiMAX technology, it places Sprint at odds with the current mood on Wall Street, which frowns on excessive capital expenditure among mobile service providers.

The nationwide network will cost between $3 billion and $5 billion, according to analysts.

Sprint is expected to announce that it will work with Motorola, the world’s second-largest cell phone maker, along with chip maker Intel, one of the major backers of WiMAX.

Shares of Sprint Nextel fell $0.15 to $16.79 in recent trading, while Motorola shares rose $0.12 to $23.22.

Third Pipe

WiMAX is a long-range wireless technology that in its fixed version can compete with both DSL and cable modems. It is sometimes called the third pipe to the home, a wireless pipe.

In its mobile version it will compete with cellular Internet services and Wi-Fi. WiMAX is generally seen as superior to Wi-Fi because it has a much longer range―about 30 miles―and is superior to cellular data because it has more bandwidth―about 70 megabits per second.

It is interesting that Sprint is the first of the major U.S. mobile operators to make a complete, public commitment to WiMAX. Both AT&T and BellSouth have tested the technology, but neither has made a commitment to build a nationwide network.

“If you are a WiMAX product supplier, this is big news because this is a big company stepping up and putting down some big dollars on WiMAX,” said John Lively, vice president of forecasting at Ovum-RHK.

“Sprint may take a beating on Wall Street, but the end game is Sprint gets to compete with both the wireline phone companies and cable companies in the broadband market,” he added.

Cable Partners

Sprint refused to comment on the announcement prior to its press conference, but competing with cable companies is hardly something on Sprint’s agenda.

Sprint has a major deal with cable operators under which the cable providers sell Sprint’s wireless services to its customers. The deal is a lucrative one for Sprint, and a key differentiator for its cable partners.

The cable operators are competing with wireline phone companies, such as AT&T and Verizon Communications, which own wireless subsidiaries. By reselling Sprint’s wireless services, the cable companies can offer their customers the full complement of data, voice, video, and wireless services.

Contact the writer:CMedford@RedHerring.com