Big Tech Goes WiMax

With financial backing from Intel, Google and major cable companies, Sprint revived its $5 billion WiMax plans May 7.

Under the plan, Sprint will merge its struggling WiMax division with Clearwire to create a new company operating under the Clearwire name.

Intel, a longtime proponent of WiMax, will invest about $1 billion into the new company while Comcast plans to contribute a little more than $1 billion. Time Warner is putting up $550 million and Google $500 million.

Upon completion of the proposed deal, Sprint, the nation's No. 3 wireless carrier, will own the largest stake in the new company, with about 51 percent equity ownership. Existing Clearwire shareholders will own about 27 percent of the venture. The new strategic investors, as a group, will be acquiring about 22 percent of the new Clearwire.

Sprint and Clearwire also announced a series of commercial agreements with the strategic investors, including 3G and 4G wholesale agreements. For cable companies like Comcast and Time Warner, the investment opens the door to offer bundles of service including wireless to compete with AT&T and Verizon.

Google will become Sprint's preferred mobile search provider and Sprint users will have easier access to Google Maps for mobile, YouTube and other Google services. Intel will supply networking gear and software for the new network.

WiMax promises faster download speeds than the latest networks run by cell phone operators, and it's even seen as a potential competitor to fixed-line broadband like DSL.

"We believe that the new Clearwire will operate one of the fastest and most capable broadband wireless networks ever conceived, giving us the opportunity to return the U.S. to a leadership position in the global wireless industry," Clearwire Chairman Craig O. McCaw, a pioneer of the cell phone industry, said in a statement.

Since staking out a claim on WiMax as its technology of the future in August 2006 and announcing a tentative WiMax partnership with Clearwire a year later, Sprint has struggled to get the project off the ground.

"We've made an excellent start developing XOHM WiMax services," said Sprint President and CEO Dan Hesse. "Contributing those advances to a strongly backed new company—in which we'll hold the largest interest—provides Sprint with additional financial flexibility and allows Sprint management to leverage and focus on our core business."

According to Sprint, the new Clearwire will have a time-to-market advantage over AT&T and Verizon, which are backing a rival technology known as LTE (Long Term Evolution). In addition, Clearwire already has a subscriber base of nearly 400,000 wireless broadband customers.

Sprint and Clearwire hope their combined wireless spectrum will allow the new Clearwire to achieve greater coverage, cost and operational efficiencies, and bandwidth-utilization than either company could by operating alone. The new Clearwire is targeting a network deployment that will cover between 120 million and 140 million people in the United States by the end of 2010.