Clearwire Elects Wireless Industry Deal Maker John Stanton as Its Chairman

 
 
By Wayne Rash  |  Posted 2011-01-18
 
 
 

Clearwire Elects Wireless Industry Deal Maker John Stanton as Its Chairman


Clearwire announced Jan. 8 that wireless industry pioneer John W. Stanton, already a member of Clearwire's board, will be its new chairman. Stanton succeeds another industry pioneer, Craig McCaw, in that position.  

Stanton already owns a wireless holding company based in Kirkland, Wash., (which is where Clearwire is based) that runs wireless systems in Latin America and in the Caribbean. Stanton was responsible for rebuilding much of Haiti's wireless network infrastructure following the 2010 Haitian earthquake. 

What's notable about Stanton, in addition to his roots at the beginning of the cellular industry, is his reputation as a dealmaker. Stanton was responsible for the sale of VoiceStream Wireless to Deutsche Telekom and its transition into T-Mobile USA. He served as T-Mobile's CEO until he brought in the recently departed Robert Dotson as his successor. Stanton's wireless companies use both GSM and CDMA services, and he is well-versed in the international aspects of wireless operations. 

Stanton takes over as chairman following the abrupt resignation from that position by McCaw on Dec. 31. McCaw's departure at the time seemed to open the way for an investment in Clearwire by T-Mobile USA's parent Deutsche Telekom, a move that had been previously rejected prior to a shakeup of Clearwire's board. Previously, the Clearwire board had been heavily populated by executives from Sprint, which is Clearwire's dominant investor. 

However, with Clearwire facing money problems, and Sprint declining to increase its current level of investment, Clearwire needed to look elsewhere if it was to continue expanding Sprint's WiMax network and to be able to deploy the LTE network technology it's currently testing in Phoenix. T-Mobile badly needs a true 4G solution to expand its network and grow its customer base. While it's been calling its HSPA+ network a 4G solution, the company needs to grow beyond that in the long term. 

Without another major investor, Clearwire has had no alternative but to sell some of its vast spectrum holdings to raise money. While this might work in the short term, the amount of spectrum that Clearwire can afford to sell without limiting its ability to deliver 4G is finite. The only real hope for Clearwire's success is an investor that needs Clearwire as much as Clearwire needs it. 

Enter T-Mobile USA. While the company has had great success selling its HSPA+ network as an alternative to the 4G offerings of Sprint and Verizon Wireless, it's ultimately still a 3G solution. It's a very fast solution, given that it's delivering significantly higher speeds than the 4G competition. But in the long run, T-Mobile needs an LTE solution to make a full-scale move into 4G. The company has been testing LTE in Europe for a couple of years, and has been conducting limited LTE tests in the United States.  

Stanton Could Broker Mobile Consolidation


 

With the Sprint executives out of Clearwire and with Stanton elected to replace McCaw along with a standing offer from T-Mobile's parent Deutsche Telekom to provide the investment that Clearwire desperately needs, what's to stand in the way of T-Mobile becoming a major investor in Clearwire to take advantage of Clearwire's spectrum and advanced LTE technology? 

In a word, Sprint. Inconveniently, Sprint owns over half of Clearwire, and unless Sprint agrees to let Deutsche Telekom invest, then there's nothing that Clearwire's board or its board chairman can do. However, without Clearwire, Sprint seems doomed to have its 4G service languish. While it could build out its own WiMax network, Clearwire has the spectrum and Sprint needs to use that spectrum, which it can't do if the spectrum has been sold off to finance Clearwire's development. 

So Sprint is kind of stuck. It either has to change its corporate mind and invest more of its own money into Clearwire or it has to allow another investor to do so, and right now there's only one of those. Sprint is, in a business sense, between a rock and a hard place. But there is a way out. 

Remember Stanton has a long reputation in the telecom industry for "making incredible deals" in the words of analyst Brier Dudley. Enabling Deutsche Telekom to invest in Clearwire doesn't really qualify as an incredible deal, although it would solve that company's financial woes. But there is one more deal that Stanton brushed up against when he was at VoiceStream. If you'll remember, VoiceStream was the GSM spin-off from Sprint when the company decided to switch to CDMA.

Stanton already has experience with Sprint, as well as VoiceStream, T-Mobile and Clearwire. He's been on Clearwire's board for a couple of years now, and he certainly knows the details of how the companies interoperate. He probably knows Sprint as well as anyone outside of the company.  

So maybe the incredible deal that Stanton is getting set to broker is something bigger than an investment into Clearwire. Perhaps it's the whole enchilada-a Deutsche Telecom-sponsored merger of T-Mobile, Clearwire and Sprint into a single company, but perhaps with two operating entities. Perhaps Sprint would handle the CDMA/WiMax end and T-Mobile would operate the GSM/LTE portion. A T-Mobile purchase of Sprint has been rumored for years. Maybe now it's actually starting to happen. 


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