Sprint has finalized a groundbreaking deal to spin off its nascent U.S. WiMAX network into a joint venture partnership with Clearwire that will be funded by Intel, Google, Comcast, Time Warner Cable, and Bright House Networks.
Sprint has been building out its Xohm WiMAX into a nationwide U.S. network that would allow true mobile broadband roaming. Clearwire was also been building out WiMAX. While Sprint was working on mostly major metros like Chicago, Washington, D.C., New York City, and Boston, Clearwire was focused mostly on smaller, second-tier cities and regions. That's why a partnership has always made a lot of sense.
However, the situation had become acute for both the Sprint and Clearwire WiMAX networks. Both needed more resources to continue to fund the rollout, and with Sprint's core cellular business in disarray, that primary source of funding had dried up. That's why a cash infusion was needed and that's why the current slate of partners have stepped in.
Dan Hesse, Sprint CEO, said, "We've made an excellent start developing Xohm WiMAX services. Contributing those advances to a strongly-backed new company – in which we'll hold the largest interest – provides Sprint with additional financial flexibility and allows Sprint management to leverage and focus on our core business. Additionally, the agreements allowing the new company and our cable company investors to bundle and resell Sprint's third-generation wireless services strengthen the distribution of our current services while reducing the complexity and enhancing Sprint's cable relationships."
The part about the Cable partnerships means that many U.S. broadband subscribers could potentially have future packages that include broadband access in their homes or businesses that also includes nationwide mobile broadband access with their laptops, using built-in WiMAX chips that Intel is poised to start embedding with its laptop processors later this year.
This deal will create a new company using the name Clearwire, with the NASDAQ ticker CLWR. Sprint will have seven directors on the new 13-member board and Benjamin G. Wolff, current CEO of Clearwire, will be the new company's CEO. Barry West, currently Sprint's Chief Technology Officer and head of the Xohm business unit, will be the president of the new Clearwire. The headquarters will be in Kirkland, Washington with large R&D facilities in Herndon, Virginia.
Clearwire Chairman Craig O. McCaw said, "The power of the mobile Internet, which offers speed and mobility, home and away, on any device or screen, will fundamentally transform the communications landscape in our country. We believe that the new Clearwire will operate one of the fastest and most capable broadband wireless networks ever conceived, giving us the opportunity to return the U.S. to a leadership position in the global wireless industry."
Paul Otellini, Intel CEO, said, "This agreement is a historic step forward for WiMAX as it represents the first nationwide deployment of a next-generation mobile broadband Internet in the U.S. The agreement also signifies growing industry support for WiMAX. Given its flexibility, coverage and speed, WiMAX will enable the mobile Internet and is already opening doors to a host of new and exciting applications, devices and business models around the world."
Google CEO Eric Schmidt said, "Google is a firm believer in supporting new ways for people to access the Internet. We are proud to invest in the new Clearwire alongside several leading technology and communications companies, and we believe that its planned WiMAX network will increase the ability for users to get high-speed broadband anytime, anywhere."
Brian L. Roberts, CEO of Comcast said, "This is a great coalition of innovative companies that have joined together to create the next generation of mobile wireless products. It is exciting to be on the ground floor of this new venture that we believe will create unprecedented high-speed wireless products and make them available across the nation. This transaction is attractive to us strategically and financially and puts in place very attractive wholesale relationships for access to Sprint's existing 3G and Clearwire's 4G networks, giving us complete flexibility to introduce wireless mobility in terms of product innovation and deployment."
Bottom line for IT leaders
WiMAX is spreading at a strong pace throughout the world, but mostly as a fixed DSL/Cable alternative. With this Clearwire deal, the U.S. remains poised to get a large, ground-breaking "Mobile WiMAX" (802.16e) network that will enable a form of roaming broadband that is superior in quality and bandwidth to the current 3G broadband networks. The partnership between WiMAX and Cable broadband will also potentially create a simpler subscription model where consumers and businesses can get both fixed and mobile broadband as part of one package.
Jason Hiner has nothing to disclose. He doesn't hold investments in the technology companies he covers.
Jason Hiner is Global Editor in Chief of TechRepublic and Global Long Form Editor of ZDNet. He's co-author of the book, Follow the Geeks.