For months, there’s been rumors of a massive deal in the works, spanning cable companies, telcos, Internet giants and chipmakers, to build and jointly sell a nationwide wireless broadband service using WiMax. Apparently, the discussions, which have been off-again, on-again, are still live with a potential deal coming as early as next week, Fortune reported yesterday.
The Rumor Mill: Comcast (NSDQ: CMCSA) and Time Warner Cable (NYSE: TWC) are negotiating with Sprint, Clearwire (NSDQ: CLWR), Intel (NSDQ: INTC) and Google (NSDQ: GOOG) on a proposed joint venture. The plan would be to combine Sprint’s WiMax unit with Clearwire’s WiMax network and build a nationwide mobile broadband network — to be shared by Time Warner (NYSE: TWX) Cable, Clearwire, Comcast and Sprint (NYSE: S). The investors would be Intel and Google, which want a next-generation network to sell its own products.
The Money: The article raises concerns about all of the companies’ ability to raise enough cash and their level of seriousness. It said Comcast will have a hard time convincing investors that after years of spending on cable upgrades, it now has to raise money and take on more debt. Apparently, Google has wavered at times, but that other partners have remained committed, with various members at times, trying “to sharpen its advantage.”
The Motivation: The cable companies have a keen interest in building a wireless broadband network because of stiff competition it’s facing from telcos and satellite companies. In addition to TV, Internet and phone offerings, the WiMax network would allow them to offer Internet access on-the-go, and potentially a wireless phone service. Recently Comcast, Time Warner Cable and Cox Communications pulled out of the Pivot cell phone joint venture with Sprint and said they will stop marketing the service.
The Timing: Observers say the deal could happen as early as next week. We’d like to point out that both Sprint and Clearwire are reporting first-quarter earnings in two weeks — on May 12. Clearwire says it will release earnings at 2 p.m. PST and Sprint says it will release earnings at 5 a.m. PST.
Comments have been disabled for this post