Clearwire, Sprint Hungry for Cash

By Wayne Rash  |  Posted 2011-08-22 Print this article Print

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 T-Mobile.

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 companies want.

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. 


Wayne Rash Wayne Rash is a Senior Analyst for eWEEK Labs and runs the magazineÔÇÖs Washington Bureau. Prior to joining eWEEK as a Senior Writer on wireless technology, he was a Senior Contributing Editor and previously a Senior Analyst in the InfoWorld Test Center. He was also a reviewer for Federal Computer Week and Information Security Magazine. Previously, he ran the reviews and events departments at CMP's InternetWeek.

He is a retired naval officer, a former principal at American Management Systems and a long-time columnist for Byte Magazine. He is a regular contributor to Plane & Pilot Magazine and The Washington Post.

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