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

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.

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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.

clwr.pngThis 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

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9 comments
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  • Too many cooks. (nt)

    .
    No_Ax_to_Grind
    • This is very typical. To do a big deal, you need more than a single

      investor. And, just think how many investors there are that own a piece of MS? Does that paralyze MS? This will be a separate company with it's own management. Really pretty simple.
      DonnieBoy
      • who has $3 billion in spare change?

        Some people have a short memory of the
        crushing cost of building infrastructure.

        To paraphrase, it takes a village
        of companies to raise a national WiMax
        footprint.

        In today's tough economic environment, there
        are very few companies that have $3 billion
        in spare change, let alone $3 billion to bet
        the farm on a single technology.

        And don't look to your banker (which it itself struggling to stay afloat) for help on this one.

        Infrastructure rollouts, of which this is one,
        killed many, many companies in the past.

        The cable companies' stock prices were hammered
        in the 1980s when they rolled out coax throughout
        the country. Now they have to spend even more
        billions to bring fiber optic cable to homes.

        Many CLECs went under putting up central office
        gear. Remember Northpoint?

        Verizon itself is spending several billion a year, and it doesn't even have anything close to a national footprint (in ads, Comcast likes to boast its fiber optic network is bigger than Verizon's).

        Even wireless vendors have paid this price.
        Remember Ricochet?

        Cell phone companies have spent billions putting
        up towers.
        rosanlo
  • Seems like the perfect marriage

    It's a Mormon marriage for sure, but the list of partners is very impressive in terms of what they bring to the party - aside from money and what is stated above.

    Intel : Diffusion of million of WiMax enabled laptops
    Google : compelling wireless broadband applications
    Cable guys : Take it with you premium content? Hmmm

    This is a real positive tipping point for WiMax in the US.
    Prognosticator
  • RE: WiMax saved: Sprint, Clearwire form joint venture; Google, Intel among

    I have a friend who used Clearwire and it was lousy. No terrain obstructions or great distances and she still had to have the modem in a certain part of the house. Worse than cell phone coverage.
    jarusinsky
  • RE: WiMax saved: Sprint, Clearwire form joint venture; Google, Intel among backers

    The current Clearwire service is not related technically to what is being promoted now. This is a much more advanced technology.
    Jim_in_VA
  • RE: WiMax saved: Sprint, Clearwire form joint venture; Google, Intel among backers

    I am on clearwire now and love it. When WiMax is available I will be signing up. :-) MORE POWER
    awells@...
  • WiMax in US is getting too Complicated In Costa Rica We Already have WiMax!

    WiMax in US is getting too Complicated, In Costa Rica We Already have WiMax!

    Yes, A Very small country is already Rolling Up WiMax and It's already Rolled up in San Jose, Cartago and Heredia.

    The problem is actually the price (a little bit expensive) for $40 for 512kbps (really) but it a closer future the speed will go up and price will go down as with ADSL)

    People Already Using WiMAX?
    Home and Bussiness All Thru San Jose and Cartago already using it and The Goverment is using it too for traffic and security monitoring.

    Unfortunelly, we're still waiting for Mobile WiMax since we have only 802.16a and not 802.16e

    We're seeing a big leap on the Govm. Telco !
    jorios_cr@...
  • wimax vs LTE

    Will WiMax grab a lot of subscribers? LTE will have global reach but is still a few years away.

    It should be interesting to see if WiMax gains a lot of subs or will it just be a niche technology in pockets?
    otaddy