Sprint has already claimed that Dish’s offer to take a 25 percent or greater stake in Clearwire is illegal under the corporate laws of Delaware, where Clearwire is incorporated. It now seems prepared to back up its claims before a judge.

Sprint is still Clearwire’s largest stakeholder, even though it doesn’t have direct control of the company. Sprint is claiming that Clearwire can’t accept an offer from Dish without its approval — approval it’s not prepared to give. Sprint also claimed that Dish is demanding veto powers and board seats that Clearwire has no right to give due to its equity holder’s agreement.

Sprint has been trying to buy up control of Clearwire since December, but it found thwarted by Dish at every turn. Clearwire originally backed Sprint’s bid, but in a surprising turn last week it switched allegiances.

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The board rescheduled this week’s shareholder meeting for June 24, recommending that stockholders vote against Sprint’s most recent offer to take over the company, and vote for Dish’s $4.40-per-share bid instead.

The two companies have been dueling over Clearwire for the last five months, each with different plans in mind for the prize. Sprint is trying to get its house in order before its pending acquisition by SoftBank, and Dish is trying to find a network operator partner to launch its LTE network. The bad blood between them has been viscous, and Dish has even challenged the Softbank deal with its own counter offer for Sprint.

The outcome Dish-Clearwire tie-up would be entirely different than a Sprint-Clearwire deal. Sprint is already the largest stakeholder in Clearwire, and is trying to buy out the company completely. Dish is trying to assume enough of stake — possible as little as 25 percent — to ensure Sprint won’t railroad it when it tries to work Clearwire in the future. Dish owns satellite spectrum that’s been newly repurposed for LTE use, but it owns no network. Clearwire has the network infrastructure and expertise to deploy to launch that network.

The question remains whether Sprint will now raise its bid enough to turn the tide in its favor. If it doesn’t it might actually jeopardize its deal with SoftBank, which has taken an acute interest in the loads of spectrum Clearwire holds.

It’s a bizarre love-hate quadrangle between four communications companies with vastly different agendas. How will it turn out? Your guess is as good as mine.

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Dish now has until June 18 to submit its “best and final” proposal. A special committee has been in discussions with Dish since April, but Sprint said Dish has yet to put forward an “actionable offer” and isn’t likely to do so. So the committee is backing SoftBank’s new bid.

SoftBank’s offer isn’t just a straight-up increase on its original bid. Though shareholders would get an additional $1.48 per share over the original  $4.02 offer, SoftBank is actually subtracting $3 billion of it from the $4.9 billion direct investment in Sprint it was planning to make.

That will leave Sprint with far fewer funds to continue its LTE network expansion and invest in Clearwire’s new LTE network if it manages to assume control over the company. SoftBank will also take a much higher stake in the new company: 78 percent, rather than 70 percent. Look at this way: SoftBank is giving into Sprint shareholders demands for a bigger high-school allowance, but it’s raiding their college fund to do so.

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Citing two unnamed sources, Reuters claimed SoftBank would prefer to close the Sprint deal, putting control of the company in the Japanese carrier’s hands, but if that fails SoftBank is ready to turn attentions to the newly minted T-Mobile. Just two months ago T-Mobile was a wholly owned subsidy of Germany’s Deutsche Telekom, but in May it bought up MetroPCS and its NYSE ticker, becoming a publicly traded company. Reuters’ sources said SoftBank has already held several discussions with DT about buying a T-Mobile US stake, and those talks have intensified in recent weeks.

The Sprint-SoftBank is already well along its way to getting the final regulatory approvals. It’s gotten the okay from U.S. national security and antitrust authorities, and now only waits for the Federal Communications Commission’s final public interest review. SoftBank would have to start that process all over again if it turned its attention to T-Mobile.

T-Mobile — besides being a smaller prize — doesn’t have Sprint’s huge spectrum interests. Sprint is the majority investor in Clearwire and its nationwide treasure trove of 2.5 GHz airwaves. Sprint is trying to take over Clearwire ahead of the SoftBank deal, which would give SoftBank the spectrum basis for a massive U.S. LTE deployment.

But there are some benefits to abandoning the Sprint deal if Wednesday’s vote doesn’t go SoftBank’s way. According to Reuters, SoftBank could walk away from the deal with $5 billion in break-up fees, currency hedging gains and sales of the Sprint stock it has already purchased. Plus, Dish is challenging Sprint’s bid for Clearwire as well, which would complicate any SoftBank plans to use its spectrum.

Image courtesy Flickr user Mavis.

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Why would AT&T, a mobile and wireline phone company, be interested in an online video portal? Through its U-Verse service, AT&T is a video-programming provider selling the equivalent of cable TV to 4.8 million households. It could be interested in Hulu for the same reasons as Time Warner Cable and DirecTV are, to bulk up their TV everywhere services.

But AT&T’s interest in Hulu might stem from much more unexpected place: its mobile division. Video is proving to a very tricky proposition for mobile operators. On the one hand, they’ve built these big fat wireless pipes to carry video, but on the other, they’re still charging per-megabyte rates that makes large-scale video usage prohibitive. Video usage is booming on mobile devices, but for the large part it occurs at home on Wi-Fi not on 3G and 4G networks.

We’re seeing some content provider-carrier deals harking back to the old days of walled garden, for instance Verizon’s exclusive agreement with the NFL to stream all of its games. But I don’t think AT&T is angling to become the exclusive mobile carrier for Hulu – no one would agree to such terms no matter how big AT&T’s investment.

AT&T, however, is keen on testing out the toll-free mobile data business model its been touting for a year, and Hulu would be the perfect guinea pig. The idea is simple: consumers are unwilling to pay the massive mobile data fees required to view lots of mobile video, so carriers would charge the content providers instead. AT&T and Verizon have been promoting this idea of subsidized mobile internet vocally, and entertainment companies like ESPN are reportedly amenable to the idea. But so far there haven’t been any takers.

By investing in Hulu, AT&T could get one of the world’s most popular online video providers to at least test out its two-sided revenue model. Hulu would pay AT&T for every megabyte of its video traffic traversing Ma Bell’s mobile networks, and AT&T would exempt all Hulu programming from its customers’ data caps.

Financially that seems like robbing Peter to Paul – Any revenue AT&T collects means fewer returns on it Hulu investment. But the deal could have enormous strategic value to both companies. AT&T customers, suddenly finding themselves free to watch CSI:Miami with no restrictions, would start gravitating toward the Hulu service and its subscription fees. AT&T rakes in the data revenue no matter what, and given Hulu’s prominent position in online video, AT&T might see some big subscriber gains as well.

If the project proved successful, then other content providers would be more likely to follow Hulu down this dark path. After all, if consumers are spending all of their mobile time on Hulu, they’re not watching Netflix or YouTube.

This might sound like a great deal for consumers, and to a certain extent it is. Such a model could spur the online video revolution on mobile devices without decimating consumers’ wallets. But as I’ve pointed out before, there could be some big unintended consequences to such a model. It would upset the delicate balance of the mobile internet by favoring the video providers who can afford to pay over those who can’t.

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Specifically Dish is demanding the right to approve three members of the Clearwire board and veto powers over certain board decisions if it invests in but doesn’t assume outright control of the company. Sprint claims that violates the terms of Clearwire’s equityholders’ agreement and the rights of other shareholders, including Sprint.

The only way to change the agreement would require Sprint’s consent, and Sprint said in its letter it would not grant it. Therefore, Sprint concluded, the proposal is “not actionable.” The Clearwire board has always leaned toward Sprint, but last week Dish played its trump card right before shareholders’ were scheduled to vote on the deal. Dish offered to pay a $4.40 a share, a full dollar more than what Sprint is offering.

The bad blood between Sprint and Dish is getting worse as the two wage M&A wars on two fronts. Sprint, which is already half-owner of Clearwire, is trying to take over the company outright, but Dish is vying for a 25 percent or greater of the WiMAX operator to ensure it will have a future place to hang its planned LTE network. At the same time, Dish is trying to buy Sprint itself, challenging SoftBank’s $20.1 billion bid to acquire 70 percent of the U.S. mobile operator.

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Correspondingly T-Mobile has said that smartphone users are consuming as much as 30 times more data than just a few years ago, and that appetite grows each year. Cisco estimates that global mobile data traffic is nearly doubling each year and will grow 13-fold in the next 5 years. As that growth comes at larger and larger scale, network operators are finding themselves at overcapacity. While the FCC is exploring ways to make more spectrum available, there is simply not enough to go around in the short term, and it’s only going to get worse.

This “mobile data crunch,” as we at Bessemer (and others) refer to it, offers one of the best investment opportunities there has ever been around telecom infrastructure. Here’s a look at a few key sectors we believe will experience outsize growth, and are investing accordingly. (Disclosure: Bessemer has investments in or a relationship with two of the companies mentioned in this piece; see below for those disclosures.)

New cell site technology

So if more spectrum isn’t available, how can carriers get more capacity out of existing airwaves? Many are looking to add new cell sites, as cellular spectrum can be “reused” at multiple locations if there is enough separation between sites. Carriers are very excited about moving to a “HetNet,” which will incorporate thousands of small cells – or low-powered radio access nodes that provide the same functionality as a larger tower for a small region. The HetNet will make the network vastly more complex, with the small cells adding thousands more points of interference that will need to be managed.

Companies like Ubiquisys are building intelligent software for small cells to make them more manageable within the Radio Access Network (RAN). Small cells also introduce complications with backhaul (that is, returning the signal to the core network). For all of their flexibility, they are often placed in locations where traditional methods of backhaul like fiber cables or line-of-sight-microwave are impractical or unavailable. Blinq Networks and Siklu are among the companies working on new methods of backhaul for otherwise hard-to-reach small cell deployments.

Offloading alternatives

An easier way for carriers to ease the spectrum crunch is simply to get rid of as much data traffic over their networks as possible, enabled by the use of Wi-Fi offload technologies from companies like AirSense, WeFi, and Devicescape.

Ralph de la Vega, CEO of AT&T Mobility, told an audience he “has been preaching about” this for some time. But he’s done more than that – AT&T now owns hotspots at some 30,000 McDonald’s and Starbucks locations, which handle traffic from the network’s customers when they are in the store. This is more difficult than it may seem, as carriers need to ensure that the consumer experience on Wi-Fi is as good or better than using the mobile network. Bringing awareness of which hotspots are accessible and have a strong signal as well as being able to seamlessly transition a user between the cellular and Wi-Fi network without interrupting service are critical areas being addressed by new companies.

Network shaping

Finally, some startups are going directly at the core network with software solutions that optimize the flow of mobile data traffic. This is perhaps the area we are most excited about, as evidenced by our investments in Intucell and Vasona Networks (Note: Intucell was recently sold to Cisco, but I remain on the board of directors; Bessemer still maintains an investment in Vasona Networks).

Earlier this year, Intucell signed a multi-million dollar deal to deploy its self-optimizing network technology across AT&T’s entire U.S. network. Intucell’s solution optimizes the RAN by identifying in real time faulty or underutilized cells and adjusting their configuration automatically to provide the optimal level of coverage. Similarly, Vasona is leveraging its position as software in the network to deliver IP video and data at the appropriate time and bit rate over a given cell.

What makes us particularly excited about this last category? Carriers can test software solutions on their network at a low upfront cost and see proven results in a short time before committing to a more substantial order. From an investor perspective, this means shorter sales cycles and a more capital-efficient business: We are now seeing startups that have never raised money before yet have already completed successful trials with major operators.

Bob Goodman is a partner at Bessemer Venture Partners.

Photo courtesy of E.O./Shutterstock.com.

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Last month, Cisco Systems scooped up Israeli self-optimizing network outfit Intucell, one of Bessemer’s key portfolio companies. The networking giant paid $475 million for the company just two years after Intucell raised its $6 million Series A round. But that wasn’t a fluke investment. Bessemer has made mobile infrastructure a significant pillar in its investment strategy.

While Bessemer is perhaps best known for its investments in LinkedIn and Skype, its most spectacular exit in the mobile networking space was Flarion Technologies, a pioneer of the orthogonal frequency division multiplexing access (OFDMA) technology that is now at the heart of all 4G networks. In 2006, Qualcomm bought Flarion for $600 million.

Its current portfolio includes mobile data traffic shaper Vasona Networks, 4G chipmaker Altair Semiconductor and network API developer Twilio, but after the exits of Intucell last month and Traffix Systems last year (bought by F5 Networks), Bessemer is looking to reload. One of the places Bessemer hopes to find to find its next wireless darling is at the world’s largest mobile trade show, Mobile World Congress.

Next week in Barcelona, Bessemer’s lead wireless partner Bob Goodman is wading into a miasma of LTE-Advanced, HetNet, diameter signaling, envelope tracking and self-optimized networking. Before the show, I had a chanced to talk to Goodman about what exactly he’s looking for at MWC and about Bessemer’s wireless strategy in general.

Wireless has been tough on the investor

Investment in telecom infrastructure startups has plummeted in recent years even as investment in services and applications has recovered since the last recession, according to Ovum. In the 12 months ending in June, new money going into networking companies was just $270 million, compared to $796 million two years before.

There’s a reason VCs are reluctant to invest in telecom, Goodman said: It’s such a stratified market. While there are hundreds of carriers around the world they tend to buy their equipment from just a handful of vendors such as Ericsson, Nokia Siemens Networks, Alcatel-Lucent, Huawei and Cisco. Small players have traditionally found it extremely difficult to get on a carrier’s radar unless you had a big vendor at your side.

After Flarion’s sale in 2005, Bessemer stopped investing in wireless players for several years. Not only were the economics difficult for small companies, but the mobile industry seemed to be going nowhere. 3G networks went up, but they were primarily used for voice. The mobile data revolution we had been promised simply didn’t happen.

But a few years ago, Bessemer jumped back into the infrastructure space. According to Goodman, several trends converged to make the market much more attractive. First, there was the iPhone, which reinvigorated the smartphone and drove a deluge of mobile data traffic over carriers’ networks. Operators were looking not only for technologies to add capacity to those networks, but also technologies to manage and optimize that traffic flow.

While data usage was exploding, the big infrastructure incumbents were fighting a massive price war over international borders. “Huawei and ZTE drove costs down, which led the vendors to chop their investment in R&D,” Goodman explained. So just as carriers needed new innovation, their suppliers weren’t in a position to deliver it.

Finally and most recently, the old carrier-vendor ties began to break down. “The carriers have changed their tune,” Goodman said. “They used to want as few vendors as possible, but now that those vendors are all suffering, they have started looking beyond them.”

Intucell is a good example of how startups are taking advantage of that trend. Goodman and fellow Bessemer wireless specialist Adam Fisher introduced Intucell — then an eight-employee company — to AT&T in 2011. After working with the company’s technology for nine months, first in AT&T’s new Innovation Lab in Israel and then in live trials over AT&T’s 3G networks, Ma Bell committed to a system-wide deployment across its 3G and 4G footprints.

Goodman is convinced that much of the new innovation in mobile is going to be done by small startups in places like Tel Aviv and London, not in the big vendor labs in Stockholm or Helsinki. And now that carriers are willing to work directly with startups — AT&T, Verizon Wireless and Sprint have all opened innovation labs for just that purpose — there’s even more incentive for entrepreneurs to attack the mobile networking market.

What Bessemer is looking for in a startup

If anyone understands the dynamic between carriers and small infrastructure players, it’s Goodman; he’s played for both sides. Before joining Bessemer in 1998, Goodman founded Celcore, a distributed cellular networking company that was bought by Alcatel, and Boatphone, a mobile operator out of the Caribbean. That gives Goodman a perspective on what to look for among the thousands of companies and entrepreneurs converging next week in Barcelona.

I asked Goodman what criteria he was using to evaluate the companies he meets. (As you might expect, he wouldn’t reveal who he plans to talk to.) He boiled his approach down to three things:

• Software: While Goodman isn’t ruling out hardware companies, he still favors companies that write code versus companies that build boxes.
• No straw men: Goodman is looking for a company that has identified a very specific problem carriers face and has developed a very specific solution to address it.
• Speed to market: The telecom industry has tirelessly long development cycles with some technologies taking nearly a decade to make their way through the standards process and into commercial networks. Goodman wants technology that carriers could feasibly deploy as soon as it is developed.

“We want to find a carrier problem — an immediate problem — that a really talented group of people can identify and can solve relatively quickly,” he said. “We also want to be able to go directly to the carrier. You don’t want someone else standing between you and the customer.”

There’s evidence that Goodman is willing to bend some of those rules, though. You could argue Goodman’s most successful investment venture broke all of the rules. Flarion built a base station box, which ultimately didn’t sell because it emerged at a time when mobile data use was insipid. Ultimately its OFDMA technology wound up in Qualcomm’s LTE architecture, but only after a long process of standardization.

There are always going to be exceptions if a company is building something exceptional, Goodman said: “I would never rule anything out completely.”

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The extra cash should come in handy if Airship plans to continue its acquisition spree of late. In December the Portland, Ore.,-based startup bought up fellow True Ventures company Tello so it could expand its marketing and branding business into Apple’s Passbook digital wallet. In October, Airship acquired SimpleGeo, adding a location-aware component to its push messaging platform. Though Airship didn’t mention anything about additional acquisitions, it did say it would use the funds to expand internationally.

Airship technology delivers the in-app and background push notifications for more than 20,000 brands with an app-store presence. Airship, for instance, powers the sports score and news updates across ESPN’s family of apps.

Disclosure: Urban Airship and Tello are both backed by True Ventures, a venture capital firm that is an investor in the parent company of this blog, Giga Omni Media. Om Malik, the founder of Giga Omni Media, is also a venture partner at True.

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Now we’re doing it, too. Instead of relying on the gut instincts, punditry and armchair quarterbacking that VCs are notorious for, our firm is pattern replicating to decide which entrepreneurs to fund.

Here are the components of a secret algorithm I developed that we use to score and rate potential investments with entrepreneurs.

1. We look at (and score) what you read

What content has been uploaded into your cerebral cortex via apps, websites, PDFs, books and other miscellaneous educational all matter to your eventual success outcome.What books have your founder team read and what have you posted in your social media feeds? If they’ve spent time reading Technology Ventures, Gear Up, Four Steps to an Epiphany and tweeting knowledge nuggets – quoting chapter and verse – that could lift their entrepreneurial success score via our proprietary algorithm. Posting to Twitter your snowboarding pictures from Lake Tahoe might say something else.

Chris Sacca has been quoted as saying he goes right to Twitter and reads the last 50 tweets before he even considers taking a meeting. In our new VC algorithm, you can scrape and evaluate multiple social media streams for what founders have read, uploaded, integrated, and executed. Quality is great, but we are really looking for the quantity of entrepreneurial material comprehended.

2. Age of cellphone number and time of first daily phone call

The age of an entrepreneur’s cellphone number reveals so much: their relative stability, how old they are, whether their number was a jettisoned friends-and-family program or an imported landline number. We get the age of cellphone number through a process called cellphone underwriting, which reveals all of the above and more, and which is perfectly legal but secretive enough that I won’t reveal how it works. At the end of the day, we’re looking for entrepreneurs who are young, stable, middle class, and who have the support of family and friends networks — and the age of the cellphone number tells us all those things.

So, I take the approximate age of a founder’s cellphone number and then during due diligence, I get a stat: The average time of their first phone call in the day. If you and your entrepreneur team are making and taking calls at 6:30 a.m PT, you’re probably talking with people back East and there’s a 50-50 shot you’re making north of a million in revenues.

So revealing data like this, that we used to W.A.G. (wild ass guess), we can now find out by using our firm’s make-shift cellphone underwriting API, which hooks in with Verizon and AT&T – the two main carriers of the iPhone. (And by “makeshift API,” I mean have our associate do it manually.)

3. How Othman Laraki are they?

Othman Laraki is a tale that is told inside of the VC community. He sold something big to Twitter. He has degrees from both MIT and Stanford, but also has a ton of street smarts. As an example of his street smarts, he squatted in 2,000 square feet of office space at Stanford’s Engineering building. That duality of street smarts coupled with academic smarts is a critical component of my firm’s algorithm.

A fund that is now underwater used to troll for deals in the basement of the CS lab at Stanford without taking into consideration the street-smart component. They failed to realize that you can’t just replicate what other people already did super long ago — you have to innovate a quarter step. That team of VCs is now begging for LP money in the pay-for-play conference known as “Venture Alpha.” (Spoiler alert: They will not make it to their next fund.)

We don’t talk about the data inputs for this street-smart metric but as a hint: Augie Garrido once said, “Question authority but follow the rules.” We are looking for entrepreneurs who question the status quo and tip-toe the fine line, but still firmly understand rules and existing hierarchies.

4. Stanford University founder team formula

If you reverse engineer the biggest exits, you can see that the whales in every fund’s portfolio had two or three founders from Stanford, with an odd-ball founder from some other school tossed into the mix. YouNoodle released public data on this observation. Our algorithm does not say “just Stanford.” It does say two or three founders from a good school with at least one in the litter that is not exactly like the others – think Cal, NYU, CMU, Illinois or MIT in a pinch.

Recently, Mark Suster, blogged about the phenomenon of overly homogenous founder teams. He argues that if teams are too similar where “all founders even have the same phone,” the founders will likely follow versus lead.

Remmy Oxley is the pseudonym of a Silicon Valley VC. Follow him on Twitter @RemmyOxley. 

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