Satellite providers DirecTV and EchoStar Communications said on Thursday that they are teaming up with WiMax operator Clearwire to deliver wireless broadband services.
Clearwire, which was founded by mobile-industry billionaire Craig McCaw, delivers WiMax broadband services to fixed locations. DirecTV and EchoStar hope to use Clearwire's network to provide broadband services in addition to their satellite TV services.
Financial details of the deal weren't released. But Clearwire, which raised $900 million in venture funding last year and went public this year, is burning through money quickly. So it makes sense for the company to look for partners that might be able to help it continue to build its network. Since Clearwire's initial public offering in March, the stock has lost roughly 20 percent of its value.
Clearwire uses WiMax, a packet technology, to deliver its service. WiMax can deliver signals more than a mile in some suburban areas, with peak data rates of about 20 megabits per second. Average user data rates fall between 2Mbps and 8Mbps. Data rates for the next-stage 3G cellular service--sometimes called 3.5G--are about 3Mbps.
The WiMax Forum, the industry group that promotes the technology, has almost completed the necessary certification requirements for new products, another major step that could help push deployment. The technology also has the foundation for a strong ecosystem, thanks to support from handset and infrastructure makers such as Motorola, Samsung Electronics and Nokia, as well as from chipmaker Intel.
These companies are all expected to have WiMax products in the market sometime this year.
Clearwire operates in 39 U.S. markets and, as of March, has been serving fewer than 100,000 subscribers. The deal with DirecTV and EchoStar should help the company broaden its customer base.
"By expanding the reach of our services through DirecTV and EchoStar, and by incorporating direct-to-home satellite video services in our own distribution channels, we believe we have an opportunity to significantly expand our business opportunity," Perry Satterlee, Clearwire president and chief operations officer, said in a statement.
The satellite companies will also benefit. Through this deal, DirecTV and EchoStar will be able to compete more directly with cable operators and telephone companies that are offering high-speed Internet access plus TV service.
Last year, satellite operators had hoped to win some wireless spectrum in the FCC's Advanced Wireless Spectrum auction. But the companies exited the auction early, without winning any spectrum licenses.
"Being able to offer services on the Clearwire network will give our customers another high-quality option to subscribe to broadband services with DirecTV's video offerings," Bruce Churchill, president of new enterprises at DirecTV, said in a statement.
Sprint Nextel is the only other operator building out a nationwide WiMax network. The carrier plans to spend $2.75 billion to build this 4G network, which it plans to have up and running in 19 cities by the end of 2008.
But as Sprint struggles to retain customers, the company may be looking for alternative-funding sources for its WiMax network. The Wall Street Journal reported on Thursday that the wireless operator is in talks with Clearwire to combine efforts in building out a nationwide WiMax network.