WiMax saved: Sprint, Clearwire form joint venture; Google, Intel among backers

Summary:Sprint and Clearwire have combined their WiMax businesses to form a new venture that will be focused on next generation broadband services. The company will be backed by $3.

Sprint and Clearwire have combined their WiMax businesses to form a new venture that will be focused on next generation broadband services. The company will be backed by $3.2 billion from the likes of Intel, Google, Comcast, Time Warner Cable and Bright House Networks.

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This new venture, which will be called Clearwire, gives WiMax better footing as a next-generation 4G wireless network. WiMax is a technology that has been supported by Intel and other technology heavyweights, but was hampered because the primary carriers--Sprint and Clearwire--lacked the financial heft to roll 4G services out.

Under the terms of the deal (Sprint statement, Clearwire statement, Techmeme), Clearwire will get Sprint's XOHM unit. The investment from Clearwire's supporters has a target price of $20 a share, but has a cap of $23 a share and a floor of $17 a share. The investment will depend on the trading of Clearwire shares over "15 randomly selected trading days during the 30-trading day period ending on the 90th day after the closing date." Comcast will invest $1.05 billion, Intel Capital will invest $1.0 billion in addition to its previous investments made in Clearwire, Time Warner Cable will invest $550 million, Google will invest $500 million, and Bright House Networks will invest $100 million, for a of $3.2 billion.

Once the deal is done, Sprint will own 51 percent of the partnership, Clearwire shareholders get 27 percent and the new investors will have 22 percent. The transaction is expected to be complete in the fourth quarter.

Also see: Would the addition of Sprint screw up T-Mobile?

What happens to WiMax with Sprint on the ropes?

The new Clearwire board of directors is packed with executives gunning to break into the next generation wireless business to compete with Verizon Wireless and AT&T. Intel has the chipsets for WiMax, Comcast and Time Warner Cable are looking to deliver wireless services and Google wants to sell more ads on the network.

In a statement, Clearwire noted:

The parties currently expect Craig McCaw to serve as non-executive chairman of the board. Along with McCaw, other directors expected to serve for an initial one-year term as new Clearwire board members are Dan Hesse, Sprint's president and CEO, Brian Roberts, Comcast's chairman and CEO, and Glenn Britt, Time Warner Cable's president and CEO. In addition, John Stanton, chairman and CEO of Trilogy Equity Partners and former chairman and CEO of VoiceStream and Western Wireless, is expected to serve on the board.

That's quite a lineup. There are a lot of moving parts to this deal and I have to wonder about whether all of these egos will mesh. One thing is clear though: These folks are determined to make WiMax reality. Here are a few items that stuck out in Clearwire's statement:

  • Google "will partner with the new Clearwire on an open Internet business protocol for mobile broadband devices. The new Clearwire will support Google's Android operating system software in its future voice and data devices that it provides to its retail customers."
  • Cable companies are going wireless in a big way. Sprint, Comcast, Time Warner Cable, and Bright House Networks will enter into wholesale agreements with the new Clearwire, becoming 4G providers. Meanwhile, Comcast, Time Warner Cable, and Bright House Networks will enter 3G agreements with Sprint to offer bundle services. That move will help Sprint out as it ponders a merger with Deutsche Telekom.
  • Google and Intel could become providers too, but have no plans to do so yet.

Topics: Enterprise Software, Google, Intel, Legal, Networking, Telcos, Wi-Fi

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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