With a WiMax beachhead established in Baltimore and the promise of a nationwide rollout of the 4G technology within the next two years, Sprint Nextel and Clearwire now turn their attention to completing a merger between the two companies. First stop, the Federal Commissions Commission on Nov. 4.
FCC Chairman Kevin Martin said Oct. 15 he plans to put the merger, pending since May, on the agency's blockbuster Election Day agenda that also includes a vote on the Verizon-Alltel merger and the use of digital television interference zones for unlicensed broadband use.
Sprint Nextel CEO Dan Hesse said Oct. 8 at the official debut of the Baltimore WiMax network that he expected no regulatory problems with the merger, and Martin indicated that the FCC has only minimal regulatory tags to attach to the deal, including a proposed enhanced 911 location accuracy standard.
Even with FCC approval, the merger still must receive approval from the Department of Justice. Hesse said he expects final approval by the end of the year.
Under the plan, Sprint will merge its struggling WiMax division with Clearwire to create a new company operating under the Clearwire name. Upon completion of the 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. A new strategic investors group-including Intel, Google, Comcast and Time Warner-will acquire about 22 percent of the new company.
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.
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.