WiMax Global Push, US Blip!

The WiMax Global push is being tainted by the departure of the Sprint CEO in the US, however there is a lot of weight behind making WiMax work, there are big companies supporting WiMax worldwide. Nokia has agreed to build base stations and has a stake in offering handsets as well. Samsung has also joined the alliance of companies pushing the 4G technology.

Trading around $20, Clearwire has not been a big stock market success. Its shares got a nice lift to $35 when it announced its WiMax alliance with Sprint. But, the shares are off at $21. Clearwire's current debt load is modest at $655 million, but, if it has to go it alone, that will rise. The company's market cap is $3.4 billion.

Sprint's market cap is $51 billion. Its revenue run rate is about $10.5 billion a quarter. Operating income in the June quarter was $316 million. The company's debt load, at $21.7 billion, is fairly heavy.

Sprint and Clearwire are facing the challenge of AT&T (T) buying licenses from Aloha in the 700 MHz frequency covering 196 million people in 281 markets, including 72 of the top 100 metropolitan areas and all of the top 10 markets. The FCC is going to auction off more 700 MHz.spectrum in January. Access to this will provide wireless operators the ability to offer better wireless broadband which is tough competition for WiMax.

Kevin Martin and the FCC have allowed for part of the 700 band to be reserved for open access - which would allow the bandwidth to be used on any device, in any way.

Google has announced that they will be throwing in their bid at the FCC’s $4.6 billion reserve price, but only if the FCC agrees to Google’s expanded demands for open access. Eric Schmidt, Google CEO, says that if the FCC will agree to open applications, open devices, open services, and open networks (conditions outlined in Google’s previous proposal), then Google will play ball.

The auction could net Google a prime piece of spectrum real estate from which to launch their very own wireless broadband network.

Will Google invest in Clearwire?

Sprint and Clearwire can face the competition separately and probably take a severe beating. Or, they can put together one company, Perhaps Intel, Nokia, and Samsung would make strategic investment to help finance building the US WiMax network. Having a single company building instead of two would save hundreds of millions of dollars.