The problem is money.
Clearwire has been suffering because it lacks sufficient capital, and because
of this, it hasn't built the network that Sprint needs. Clearwire wants Sprint
to give it more money to do the network build-out, but it doesn't want to
acquire more of Clearwire in the process because Clearwire's balance sheet
would be bad for Sprint.
Buying Clearwire outright
would solve Sprint's 4G problems, except for one thing-money again. Buying
Clearwire could leave Sprint without enough ready cash to build out the network
in time to compete with either the newly engorged AT&T or the newly revitalized
Is there one way out?
Perhaps, those cable operators would agree to kick in some funding to help
build out the Clearwire 4G network if Sprint could make it worth their while
farther down the road. How might this happen? Perhaps, by offering favorable
terms for their own local wireless services such as the one Cox is launching.
Or, perhaps, by promising LTE for other wireless services that the cable
For the cable companies, LTE
offers a great deal of promise, if only because it offers them bandwidth
without the one thing that cable companies don't like-the cable. A means of delivering
program material or Internet services using wireless technology is something
that the cable providers really want, at least for some applications. Continued
involvement in Clearwire could give that to the cable operators.
So it may be that total
ownership of Clearwire isn't required so much as outright control of
Clearwire's operations. A money infusion from the Cable operators would help
build out the 4G network, which Sprint so badly needs. In return, Sprint would
provide access to WiMax and LTE services to the cable operators that they could
use, and which would bring additional revenue to Sprint.
Regardless of how Sprint
decides to approach it, a bailout of Clearwire is necessary. Sprint needs to
keep the company healthy to provide national access to 4G. Perhaps, a deal with
the cable companies will provide that infusion of cash. Perhaps, Sprint will
need to buy out all of Clearwire. Either way, Sprint is caught in a dilemma.
Without additional investment, Sprint doesn't have enough of a 4G network
to compete in a post-merger world, regardless of which way the merger goes.