Sprint & ClearWire : All Clear the long Sprint is on for WiMax
By Azam on March 26, 2008Sprint is planning to renew efforts towards WiMax with new partners to fund venture with CleaWire. ClearWire is the company founded by Craig McCaw the wireless communications pioneer seeking to develop a wireless broadband internet running on WiMax. Earlier, Sprint closed the venture the ClearWire last November. Sprint has lagged behind in the carrier space losing customers, splitting off Embarq, and change in management. The WiMax venture was seen as a must to revive Sprints fortunes, the company recently had experienced a massive 29B write down, and giving an edge in ability to compete with larger carriers with a cheaper faster network advantage. ClearWire by itself is not in the best financial position in current market conditions to roll out a network and needs capital and/or partners to move beyond a small regional player.
Sprint is looking to partner with cable companies Comcast and Time Warner to form investment partnership to fund WiMax. This would be a welcomed effort to bring WiMax to nationwide and introduce an alternative technology that will lead to faster deployment of networks to handle more data traffic at higher speeds.
The joint venture would use WiMax technology to support Internet access at speeds 3x and up to 5x faster than traditional wireless networks and could support a wide range of service: mobile broadband , telephony, and video applications. Also, the partnership would create a nationwide wireless network using WiMax technology, which is designed to provide high-speed Web access from laptops, cellphones and other mobile devices with ability to deliver high speed mobile video. WiMax is seen as a better alternative for traditional fixed-wire and current mobile Internet that could be offered easily across an entire metropolitan region.
The Parties
Sprint and Clearwire have been working to cooperate on a WiMax rollout and are now working to raise $3 billion for a joint venture. Comcast the national largest cable company would contribute 1B , and Time Warner number 2 cable company would contribute 500M. Also, Bright House Network number 6 Cable Company is considering contributing 100M to 200M into the venture. The WSJ reported on the talks between the parties mentioned.
Cable companies are interested in entering the wireless filed to help counter and stave off the completion from leading carriers like AT&T and Verizon. The large carriers have entered into the cable companies turf by offering television and ability to offer bundled services quad play: landline, internet broadband, mobile and now video television. The cable companies need to distinguish themselves from large carriers and entry to wireless high speed broadband and video capability maybe the answer.
Content Play
The cable companies need to take advantage of the power of content and capability to reach a larger user base. Cable companies will benefit from the content license they hold and ability to distribute over a wireless network to wide variety of devices inside and outside the home. Also a tremendous amount of content is being created and cable companies will be able to participate in the dissemination both ways. The venture may offer a lower capital expenditure in building out a network and participate in the equity being developed.
Issues
Previously the participants have invested in Pivot to offer wireless services and have problems working and cooperating together in successful manner. The Pivot project suffered from complications and whole range of issues that plagued the expansion and lead to the termination of the project. Also, the cable companies have bought wireless spectrum and have yet successfully deployed wireless networks. Cable companies are traditionally highly leveraged with debt entities and would benefit with reduction in capital expenditure plans. The negotiations will need to cover a wide range of issues that need to be addressed.
Other Parties
Intel and Google are mentioned to be interested in the joining in the effort in the venture. Intel has invested in Clearwire, and makes chips that would be used to connect to WiMax network. Intel has invested billions into the development of WiMax technology and would benefit from a major nationwide roll out. Google would be interested in promoting wireless broadband and benefits from increase usage over the internet. The venture will require significant amount of money to fully build out the network. International parties are likely to enter the fray with names of SK Telecom and SingTel as potential investors in the technology.
Sprint and Clear Wire are seeking additional fund for the network build out that is expected to cost form 5B to 12B. Despite the cost, he potential for WiMax and and interest parties invested in the technology success are large. ABI Research forecasts that U.S. WiMax service revenues will add up to more than $10 billion by 2012.
Categories : WirelessTags : Clear Wire, Comcast, Google, Intel, Sprint, Time Warner, WiMax, Wireless