News Analysis: The resignations of three top Sprint Nextel executives from Clearwire's board of directors on Sept. 30 may have opened the way for investment in LTE by T-Mobile.
When three top executives from Sprint Nextel,
including CEO Dan Hesse, resigned from the board of directors of 4G
provider Clearwire, Inc. the official reason was changes in the
anti-trust laws regarding interlocking boards of directors
But there's every likelihood that the real
reason was money. Clearwire needs more money to continue building out
its 4G network, and a major source of such money is Germany's Deutsche
Telekom and its U.S. arm, T-Mobile USA.
While T-Mobile may be the smallest of the
national wireless carriers, it's really part of the largest global
wireless company. Deutsche Telekom is ubiquitous globally, and when its
parts are added up, it's much larger than the U.S. competition. In
addition, it has plenty of money to fund investments in Clearwire and
its Clear 4G wireless service.
The biggest hold-up in the past is that Sprint
Nextel holds 54 percent of Clearwire's stock and seven seats on its
board of directors. There has been strong opposition to allowing the
T-Mobile investment by a few of the Sprint executives on Clearwire's
Now that the opposition has departed the board,
there's one other annoying little problem. Clearwire's current service
is WiMax. T-Mobile has already said that it has no intention to adopt
WiMax as a 4G technology, pointing out that its HSPA+ technology
provides far greater bandwidths and is capable of much higher speeds
than WiMax. In its current implementation, T-Mobile's HSPA+ is two to
three times faster than Sprint's 4G.
But there's more to Clearwire than WiMax, and
there's more to T-Mobile than HSPA+. Clearwire is already testing a
very high-speed version of LTE in Phoenix, Arizona
It's the only existing version of the LTE technology that's as fast or
faster than T-Mobile's 3G. T-Mobile, meanwhile, has said that its next
step is LTE, but the company isn't currently testing that technology in
the U.S. Furthermore to make LTE fast enough to meet T-Mobile's
demands, it needs more nationwide spectrum. Clearwire has that.
In fact, Clearwire has what can only be
described as vast spectrum holdings, of which WiMax needs only a
relatively small portion. Another avenue for raising money would be to
simply sell some of that spectrum to T-Mobile, which could combine it
with its existing spectrum holdings to field a national LTE presence
much greater than it can now.