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:
- Oct. 25, 2004: Intel pushes WiMax by funding Clearwire
- July 5, 2006: Clearwire nixes planned IPO, raises $900 million
- Aug. 8, 2006: Sprint says it will go with WiMax for 4G
- Dec. 19, 2006: Clearwire files to go public again
- March 8, 2007: Success! Clearwire raises $600M in IPO
- June 14, 2007: A troubled Sprint mulls its WiMax plans, ponders a JV or spinoff
- July 20, 2007: Sprint and Clearwire combine for WiMax rollout
- Aug. 2, 2007: Sprint bails on spectrum partnership with cable companies
- Oct. 9, 2007: Sprint CEO Gary Forsee gets the boot
- Nov. 8, 2007: Sprint and Clearwire have second thoughts and kill JV
- Jan 29, 2008: Sprint and Clearwire need each other, maybe more partners
- Feb. 28, 2008: Sprint posts a $29.5B loss after writing down Nextel acquisition