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U.S. WiMAX Saved by $3.2 Billion Infusion

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You can all Xohm now — and call it Clearwire. The much talked about WiMAX joint venture between Clearwire and Sprint Nextel is going to happen and the news is going to come as soon as tomorrow. The combined company is going to be worth $12 billion, The Wall Street Journal reports. Here are some facts:

  • Comcast is pumping in $1.05 billion.
  • Intel Corp. is putting in $1 billion.
  • $550 million will come from Time Warner Cable.
  • $500 million will come from Google.
  • $100 million will come from Bright House Networks.
  • The new company is also going to be called Clearwire.
  • Current Clearwire CEO Ben Wolff will also be the CEO of the new company, Craig McCaw will be chairman.
  • The service will offer voice service and broadband.
  • Cable providers will sell it under their own brand, with a re-seller agreement with the new Clearwire.
  • There is a good chance this service comes out before the wireless guys roll out their LTE networks.

Other details are sketchy, but here are my thoughts:

  • Sprint Xohm is dead.
  • Craig McCaw can chalk this up another win — he saved his near-disaster investment(s) in Clearwire with this deal.
  • Intel will throw mad money to save some of its investments, however foolish they might be.
  • McCaw & Wolff bluffed their way to a sweetheart deal. The cable companies, Google and Sprint are all playing from a position of fear. McCaw made AT&T buy his wireless operation, spend billions on it and then walked away, smelling very green. Same is true this time.
  • Many might see this as a win for Dan Hesse; I think of it as the start of one giant hack job in Overland Park, Kan. He will sell Nextel and be left with a puny Sprint that will eventually be sold to T-Mobile or someone willing to pay up just to shut up Wall Street.
  • You might want to recall the AT&T implosion and the end of Michael Armstrong, who had the right ideas at the wrong time. Of course, he listened to Wall Street too much.
  • The big winners will be the equipment providers: Motorola, Nortel, etc.

The elephant in the room:

This is a spaghetti-like mess of conflicts and self-interests. I wonder how open this network is going to be? Clearwire has a history of blocking other services such as VoIP carriers. Comcast is a known P2P offender. Will Google be our only search option?

The final word:

I told you so comes to mind :-)

40 Responses to “U.S. WiMAX Saved by $3.2 Billion Infusion”

  1. LTE still has a long way to go.

    The industry has been talking about WiMAX for more than four years, and it is finally being deployed now. UMTS was initially to be deployed end of the 90s. It actually took 4-5 years longer than expected.

    So expect LTE early in the next decade.

  2. The Clearwire deal is a major breath for WiMax and I think this is probably the most important aspect. Let’s hope that the US example is taken up in Europe in a similarly big way. 3G data contracts here are not exactly user friendly and my last search here in Greece resulted in 50 euros per month for a 30GB monthly volume limit. Obviously more competition is needed.

  3. Gubatron

    I really hope Martin Varsavsky comes out with a Wimax fonera, or that they start selling Wimax routers all over the place.

    I dreamed Wimax being as popular as Wifi, just that the routers would be faster and with much larger range.

    This sucks, since I bet the wireless carriers will start marketing it as the next thing after 3G, and they’re gonna make it look as cellular technology which runs on closed spectrums.

    I hope Varsavsky will run ahead and come out with a wimax upgrade of the foneras.

  4. Jim- Your exactly right in your thinking that the Cable Cos will be providing the backhaul. They are aggressively pursuing that now. And with the throughput available it is a solid choice.

  5. Bill Ferrante


    What do you think this means for Verizon Wireless / Google with regard to the open access stipulation on the recent spectrum auction.


  6. D. Hinez

    This may be the end for the dinosaurs. With Cable getting a strong inside edge to the mobile market via this WiMax company, watch out. And Google will be the default search site here, so they get right around the incumbents.

  7. Om: I was following this for a real long time, am very happy that a nationwide WiMax network is looking very real now. When you say that the cable companies are participating out of fear, do you mean they fear that WiMax can eventually chew into their bread and butter in-home ISP/TV delivery business? Also, if Verizon and ATT are both embracing LTE, can they use parts of their fiber deployments as backhaul – at the data rates being promised by LTE, it almost seems like it may be competitive to U-verse/FiOS. Thanks again for this summary and following this so closely, its very very helpful.

  8. Jennifer Khoury, Comcast

    We certainly all have our own interests, but we all have a self interest to make it work. We’ve all invested in this deal which is powerful motivation. We all also want to create next generation products that will benefit by bringing high-speed wireless connectivity to consumers. So, I think the partners will work hard to get through whatever issues come up.

  9. how about a crickit/metroPCS/sprint merger offering unlimited nationwide basic voice dirt cheap on the current metro/crickit pricing model? thats still all the majority of americans care about.

  10. Curious if you think the CableCos will help resolve the backhaul issue by connecting basestations to their metro fiber or HFC networks. Heck, one business-class CableCo data connection would provide more throughput than the puny T1s in use today for backhaul.

    Perhaps the Cable companies will resolve Sprint’s backhaul mess.

  11. With this division spun off, what’s Sprint Nextel left with?

    Nextel as a division:
    * Nextel has dwindling customers, outdated handsets, no hope of a future with iDEN.
    * Appeals court decision a few days ago coupled with FCC decision means perhaps hundreds of iDEN sites will be turned off starting in late June, degrading that network.
    * With consolidation in Kansas City, many more Nextel managers are leaving or have left, leaving little in place for a buyer.
    * Sprint Nextel still has the huge 800 MHz relocation burden on it, which could result in untold billions still to be spent
    * So…who would buy Nextel?

    Sprint as a core company:
    * Mobile broadband will be gone. I assume this deal spins out 3G and 4G, although that’s unclear. If Sprint is left with EVDO that’s a little confusing.
    * A voice-only carrier has little to offer, except in bundles with its spun-off partner, I suppose, and the cable companies and Qwest. So perhaps it becomes a nearly commodity voice offering, almost like an MVNO of itself.
    * Sprint’s services business apparently does quite well, but it’s not really related to the core nature of their remaining business.
    * Sprint sold off all its landlines, so there’s nothing to fall back on there yet.
    * So…who would buy Sprint? Maybe T-Mobile to gain the voice subscribers, but it’s incompatible technology (CDMA v. GSM), so why bother?