[qi:___wimax] [qi:045] Sprint Nextel’s (S) rough patch is turning into a highway from hell. The exit of CEO Gary Forsee, questions about its plans for a WiMAX network and its aborted partnership with Clearwire (CLWR) have provided fertile ground for all sorts of rumors. Rich Tehrani reports on one such rumor: Google buying Sprint, then spinning out the phone business.
Ludicrous? Maybe. Maybe not. I don’t have first-hand knowledge as to whether or not this rumor is even remotely true, but there is one way it could all make sense.
Sprint spins out its WiMAX business. Let’s call it — for lack of a better name — 3rdPipeDream Inc. Sprint owns a big chunk of equity of this company, mostly because it owns a lot of spectrum and has built out some parts of the network. 3rdPipe then invites titans of Silicon Valley to invest. Since it is going to cost Sprint around $5 billion to build out its WiMAX network, it is safe to assume that 3rdPipeDream is going to need more than $5 billion.
Google (GOOG), Intel (INTC), Cisco Systems (CSCO), Apple (AAPL) and a whole slew of Silicon Valley companies that need the “third broadband pipe” could team up and invest in the new company – but on a premise that 3rdPipeDream will operate as a wholesale wireless broadband network, following the rules similar to the ones proposed by Google for the 700 MHz auction. Most of these companies are sitting on mountains of cash and could put it to good use by breaking the broadband duopoly.
Those in Silicon Valley who have often lamented about not getting an even (broadband) playing field can now put their money where their mouth is — in the third pipe. A total investment of $3 billion could help the new company raise an equal amount in debt, backed by anchor tenancy of, say, Google, which is desperate to extend its reach to the wireless domain.
Google CEO Eric Schmidt had previously indicated that his company wouldn’t hesitate to participate in the 700 MHz wireless spectrum auctions, where the opening bids could be in the $5 billion range, so an investment in this WiMAX-only company isn’t that unreasonable, especially if it can offer ad-supported wireless services.
Similarly, Intel, which had invested $600 million in WiMAX service provider Clearwire, could invest in this hypothetical company because it will help sell chips. Maybe Intel can help convince Clearwire to throw in its lot with 3rdPipeDream. Cisco and Motorola (MOT) and others have their own vested interests — selling equipment, for instance. And Steve Jobs & Co., when given access to true wireless broadband, could turn iPod Touch into a truly disruptive device.
Now what are the odds of this happening? As high as A-Fraud returning to the third base in the Yankees stadium.
As for Sprint, this could bring some clarity to its business. (Talking about spinning off their businesses, the company should also consider spinning off its iDEN business which could serve the government and related entities such as police and fire departments. With this network out of the way, Sprint should refocus its attentions on consumer wireless or try and sell its CDMA business to Verizon.)
Poke: A poke is a way to interact with your friends on Facebook.
Superpoke: Why just poke when you can pinch, hug, tickle, pwn or even throw sheep?