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CableCos Join The $3 Billion U.S. WiMAX Rescue Act

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WiMAX in the U.S. has been a bit on the ropes, but it isn’t dead yet. And if you believe The Wall Street Journal, a miraculous comeback maybe in the offering, thanks to some deep-pocketed cable companies’ willingness to write megamillion-dollar checks.

The WSJ reports that Comcast, Time Warner Cable and Bright House Networks are contemplating investing $1.6 billion in a new company that would be operated by Sprint-Nextel and Clearwire. This is in addition to $1 billion that Intel is rumored to be putting into the new company, along with hundreds of millions of dollars coming from Google. The new company is aiming to raise about $3 billion. Here is how the total rumored funding for the new company breaks down:

1. Comcast: $1 Billion
2. Time Warner Cable: $500 Million
3. Bright House Networks: $100-$200 Million.
4. Intel Corp.: $1 Billion
5. Google: Undisclosed Millions.

Just to recap the back story, WiMAX has been in trouble since Sprint-Nextel hit the skids. Clearwire, another WiMAX proponent, has seen its shares plummet in recent months. The two companies were contemplating a joint venture but then dropped the idea. I proposed perhaps Silicon Valley companies could get Sprint to spin off its WiMAX business, and then fund what essentially would be a wholesale network. Apparently someone else was thinking along those lines.

A few months ago it emerged that Sprint-Nextel and Clearwire might throw their WiMAX lot together and create a brand-new company backed by some heavyweight Silicon Valley investors. The reports/rumors of this NewCo have been floating around for a few months now, but now there seems to be an urgency around the idea.

WSJ reports that new CEO Dan Hesse has been pushing all involved and wants to get things wrapped up before the CTIA show next week. He also wants to get the network up and running so they can upstage AT&T and Verizon in the 4G race. (Read: LTE vs. WiMAX) Sprint did quite well when it launched its PCS network before its rivals and won market share by touting its better quality in the early days of the cellular boom.

Cable companies have previously bought spectrum and dabbled in ill-conceived (and equally poorly executed) joint ventures with Sprint, with little or nothing to show for it. This time, it seems they might be serious about fighting the phone companies in the wireless arena. Verizon and AT&T are sitting on 700 MHz spectrum that can be used by those companies to steal cable companies’ customers.

Whatever the reasons, I hope this new company is established, and adds as a competitive counterweight. And I hope they call it Xohm!

How did We Get Here? A Sprint/Clearwire Timeline:

18 Responses to “CableCos Join The $3 Billion U.S. WiMAX Rescue Act”

  1. Blog Administator

    @ Jose-

    No, I did not mean that all countries other than US are 3rd world. Anyone following wireless knows that the original vision for deployment of WiMAX is for countries with no legacy networks first.

    Makes no sense to lay cable and FO any more. Just set up towers.

  2. As per industry news, Major MSOs such as Time Warner and Comcast are in talks with Sprint and Clearwire to invest upto 1.5 Billion. There are other MSOs as well which are looking at investing and joining the bandwagon.The coming in of Cable MSOs in a WiMAX venture was only to be expected and has been in the air for some time now. The winning in the 700 MHz auction of the telecom majors such as Verizon and AT&T has also set the cat amongst the pigeons as to how these companies will leverage this very valuable broadcast spectrum.
    Will it be using technologies such as WiMAX ( the profiles are yet to be developed for 700 MHz) or will they use it with mobile 3G technologies and FLO? Or other ways of using the bands with open access? These questions will be answered very soon.
    In the meantime for those who have been left out in auctions, it is time to focus on new strategies. What can be more innovative than the Sprint and Clearwire WiMAX networks which have been in making for a while now? WiMAX networks do have clear advantages in providing QoS based connectivity for streaming applications as well as multicast channels. The MSOs need this sorely for VoD content as well as for enabling triple play services. They can also target a host of mobile devices which are Wimax enabled for video and multimedia applications.
    With new Systems on Chip(SoC) with ultra low power consumption and conformance with Wireless ( 802.11n) as well as mobile WiMAX wave 2 certification profiles making a strong surge, the mobile WiMAX scene is set to be a witness to major changes. Many new applications and devices will get powered and the broadcast sector is set to be one of the largest gainers in this regard.

  3. It’s not surprising that cable-com would enter the wireless space. I believe cable-com has always felt that telecom’s entry into TV was deeply intrusive. Thus far, the only way they’ve been able to come up with the meager response by entering landline with VOIP. But to step into wireless, now that is a real retaliation!

    I am a bit worried about the HW side though. Seems like the infrastructure suppliers are betting on LTE.

  4. Very good comment from the Blog Administrator.
    Just one remark, when you say this technology is for the third world, do you include Spain, Europe, Japan, Korea and Taiwan? Because in these places WiMAX is taking off, and if these are 3rd world, there must be a 4th or 5th world too.

    But I agree that apart from 1st world countries, WiMAX makes a lot of sense for broadband access in emerging countries where fixed line penetration is very low: South East Asia, Africa and to some extent, some countries in South/Central America

  5. Blog Administator

    WiMAX is not dead. Just DOA in USA. Device manufacturers have not been concerned about the US market for years. All the growth is in Europe, Asia, and India. Intel is already testing WiMAX networks in Spain. This tech is for the third world and the OLPC crowd with mesh networks.

    Besides technology always overlaps. Mobile and wireless is no different. USA will be last to see WiMAX because of legacy technology, lack of innovation, and a grip by the duopoly of current telco and cable corporatists.

  6. Regardless of all the technical mumbo-jumbo in the comments above, this is a way for cable to hedge their bets. I’d personally like to see a wireless world without proprietary cell networks, cable, landlines, satellite, etc. In a WiMax world, everything will be delivered over ip and this will be a big win for the consumer.

  7. Ok, I see a group of cablecos who might want to do something with WiMax and it makes sense. For them it would be possible to build on top of their existing networks. You need 40Mbit to the antenna to deliver 40Mbit from the antenna to the end user. In order for this to work you need a network that can deliver the 40 mbit and the cablecos have that (in urban areas). There is no mobile broadband without standard broadband.

    However.. end-users want to be able to use their mobile broadband outside major urban areas too… And here lies the problem for the cablecos. they are geographically much more limited than the Bells.

    Brough Turner recently mentioned how hard it is for mobile telco’s to deliver mobile broadband because of backhaul costs. This inspired me to blog about No mobile broadband without broadband. In the end it seems that a country like the US that is lagging in the roll out of wires will also lag in the roll out of wireless…

  8. Before the WIMAX hype starts again…

    Let’s not forget that the mobile ecosystem has been continually driven towards a single standard due to the market and economic benefits of volume. It is not about the fastest speed or the lowest cost network, it is about the largest technology standard pulling the first release of the best devices which in turn pulls customers. This applies to wireless as it did to the classic VHS/Beta standards battle. In wireless, it has been TDMA, CDMA, I-DEN, etc. all falling to the highest volume, best devices first GSM camp.

    LTE is two years away. The vast majority of the large mobile carriers, GSM or CDMA, will go there. It is the natural, comfortable (as in by committee comfortable), and low risk step for them. For the first time we will have a real single global (*except for potentially some Chinese carrier(s)) mobile wireless network standard albeit at varying frequencies.

    WIMAX will not stand a chance. If you are Apple and building the iPhone Lisa in 2011 would you build it for 802.16e growing to cover less than 1B- PoPs or LTE growing to cover 6B+ PoPs with multiple carriers per market? How about Nokia, RIM, SE, HTC, etc.?

    Even Samsung, the leader in WIMAX devices, spends much more $ and produces much better GSM and CDMA devices than their small and fugly WIMAX set. They have much better market opportunity building UMTS/HSPA devices over the next 3-5 years than they will have building faster 802.16e devices.

    My two bits…