FCC Approves Sprint-Clearwire WiMax Deal

Sprint Nextel and Clearwire cleared the final regulatory hurdle to creating a nationwide WiMax network Nov. 4 as the Federal Communications Commission approved the $14.5 billion merger of Sprint's Xohm division with Clearwire's operations. The new company will operate with the Clearwire name.

The merger approval capped a long day at the FCC as the agency also approved the $28.1 billion Verizon-Alltel merger and established rules for the use of unlicensed devices in the interference buffer zones between television channels known as white spaces.

Since staking out a claim on WiMax as its technology of the future two years ago only to have a tentative deal with Clearwire fall apart, Sprint revived its WiMax bet in May with the merger announcement. Among the heavy hitters investing in the venture are Intel, Google, Comcast and Time Warner. The strategic investors will be acquiring about 22 percent of the new company.

WiMax's 4G technology allows for the delivery of last-mile wireless broadband access. WiMax promises faster download speeds than current cellular networks and has the potential to be a competitor to fixed-line broadband such as DSL. Verizon Wireless, AT&T and other mobile carriers have committed to a 3G technology known as LTE.

"[Clearwire] will enhance competition and solidify wireless as an additional broadband platform," FCC Chairman Kevin Martin said. "Moreover, Clearwire committed to embrace more open networks, one open to all applications and devices. This approach will spur innovation and give greater choice and improved services to consumers."

Considering the FCC's open network mandates for the spectrum won by Verizon Wireless in March's 700MHZ auction and the decision to open white spaces, Martin said wireless carriers are making "considerable progress" in opening their networks to legal devices and services.

"The availability of third-party handsets with the capability of downloading the applications of the user's choice will provide substantial opportunities and competitive pressure to ensure that the benefits of open platforms are realized," Martin said, adding that there is a now a "ripe field for wireless innovation and growth."

FCC Commissioner Michael Copps also praised the competitive aspects of the Sprint-Clearwire merger.

"This network will provide millions of Americans with an additional option in the market for high-speed fixed broadband access—which is currently a duopoly or worse between cable and phone companies," Copps said in a statement. "The new network will also provide millions of Americans with a new option for mobile broadband Internet access—also currently a duopoly or worse between incumbent providers. So this counts as very good news for American consumers."

Sprint CEO Dan Hesse said in October at the official launch of the nation's first WiMax network in Baltimore it will ultimately cost $3 billion to $5 billion to build out the network. Intel will invest about $1 billion in Clearwire, while Comcast plans to contribute a little more than $1 billion. Time Warner is putting up $550 million and Google $500 million.