Clearwire, Sprint Nextel to merge wireless units

KIRKLAND, Wash. — Clearwire and Sprint Nextel are planning to merge their wireless broadband units to create a new $14.55-billion (U.S.) wireless communications company.

The new company, to be named Clearwire, will receive a $3.2-billion investment from Intel Corp., Google Inc., Comcast Corp., Time Warner Cable Inc. and Bright House Networks. The investment is based on a target price of $20 per Clearwire share and will give the companies a 22 per cent stake in the new venture.

Sprint Nextel Corp. will be majority owner with a 51 per cent equity stake, while existing Clearwire shareholders will receive about 27 per cent interest.

Clearwire, which will concentrate on rolling out a mobile network based on the emerging WiMAX standard, will also receive an investment from Trilogy Equity Partners, led by U.S. wireless industry veteran John Stanton.

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.

Sprint and Clearwire, a startup founded by cellular pioneer Craig McCaw, had already announced their plans to build out networks using WiMAX technology, but had been looking for outside funding.

The new company will be led by Clearwire Chief Executive Benjamin Wolff, with Sprint Chief Technology Officer Barry West serving as president. West also leads Sprint's XOHM division.

The Kirkland, Wash.-based venture will house workers from Clearwire and Sprint's XOHM unit and will have research and development and other operations located in Herndon, Va.

The deal, which has been approved by the boards of all companies involved, is expected to close during the fourth quarter.

DoCoMo disbands WiMAX partnership

Following its failure to secure a chunk of WiMAX spectrum in December, leading Japanese carrier NTT DoCoMo has dissolved its wireless broadband partnership with ACCA Wireless.

Network technology firm ACCA had entered into a strategic partnership with DoCoMo last summer, for the purpose of securing a license to provide broadband wireless services based on mobile WiMAX technology.

But Japan's Ministry of Internal Affairs and Communications granted the two available broadband wireless service licenses to rival operator KDDI and PHS operator Willcom, rendering the DoCoMo partnership no longer relevant.

KDDI and WIllcom are set to launch WiMAX services in 2009 and may also lease out spectrum to other parties interested in offering WiMAX services.

Can Sprint Hang On to WiMAX in the Face of a Financial Struggle?

“Sprint is under increasing financial pressure as it loses subscribers to competitors such as Verizon, T-Mobile, and AT&T,” says Phil Solis, principal mobile broadband analyst at ABI Research. “Many say Sprint should focus on its core business rather than push forward with WiMAX, but this idea is nonsensical.”

ABI Research believes that within the general context of competitive prices, extensive marketing campaigns, and the continual release of new devices, Sprint would be foolish to abandon a differentiator such as WiMAX.

“It’s ironic,” continues Solis, “because Sprint’s investors seem to be pressuring the company to slow down if not halt completely its WiMAX deployments; meanwhile this could be the best avenue to turn the company around.”

In July 2007, Sprint announced a partnership with Clearwire, splitting build-out costs 63%:37%, respectively. But rumors suggested a breakdown, causing Sprint to bear the full financial weight with respect to WiMAX development, thereby adding to its monetary burdens. Many believed the contract was severed, but in fact, the two companies never formed an official contract; only a letter of intent was signed.

“So in reality, a ‘breakup’ never occurred,” explains Solis. “And at present, both companies are continuing with their own mobile WiMAX networks, with various options still open – a partnership remains viable. This may take a form roughly similar to what was originally conceived, or it may be a roaming arrangement.”

WiMAX network deployments hold great potential to re-shape the global telecommunications industry due to WiMAX’s expanded device array in which handsets play just a small part. Other 3G and 4G air interfaces will do this as well, as noted by Samsung’s HSPA-enabled camera, Amazon’s Kindle e-book reader with EV-DO, and Verizon Wireless’ announcement that it will open its network to any device supporting its air interfaces and spectrum; but there is a bigger push to do this with WiMAX, and it is expected that WiMAX chipset prices will be more competitive than 3G chipsets.

The recent ABI Research report WiMAX Market Analysis and Forecasts examines major drivers and barriers for WiMAX and compares it with 3G and other 4G technologies, and contains forecasts for 802.16-2004 and 802.16e-2005. It forms part of two ABI Research Services: Mobile Broadband, and Wireless Infrastructure.


ABI Research is a leading market research firm focused on the impact of emerging technologies on global consumer and business markets. Utilizing a unique blend of market intelligence, primary research, and expert assessment from its worldwide team of industry analysts, ABI Research assists hundreds of clients each year with their strategic growth initiatives. For information, visit www.abiresearch.com, or call +1.516.624.2500.

New handheld set to exploit WiMax

A Taiwanese government-backed consortium has developed a powerful handheld PC that uses a WiMax wireless broadband connection to access the web.

The MTube, as the device is called, carries a 1GHz microprocessor made by Via Technologies, an x86-based processor able to use software meant for PCs. But the MTube weighs only 150 grams and has a 2.8-inch screen, so it's small enough to fit in person's pocket. It can store 8GB of songs, photos and other data and runs on a Linux OS.

MTube also works with Wi-Fi connections, but does not work on 3G mobile telecommunications networks, according to Shen Shu-heng, an official at Taiwan's Institute for Information Industry (III), one of the groups responsible for the device.

Development of the MTube, which is made solely from parts manufactured in Taiwan, is aimed at promoting Taiwanese made goods, as well as developing more devices and applications for WiMax wireless Internet broadband services, Shen said.

Taiwan is positioning itself to be one of the fastest adopters of WiMax connectivity outside of North America through its MTube initiative. Officials see the technology as a good way to spread broadband Internet access throughout the island, which includes remote mountain villages and sparsely populated outlying islands.

Last month, the Taiwan government added several multinationals to a growing list of WiMax wireless broadband technology partners, including Alcatel-Lucent, Motorola, Nokia Siemens Networks and Sprint Nextel. The partnerships are intended to encourage foreign companies to build WiMax research and development centers in Taiwan and look to Taiwanese companies for parts and contract manufacturing work.

Intel was an early champion of WiMax as a replacement for the Wi-Fi wireless networking standard, used for Internet access in coffee shops, airports and other places in much of the developed world. The chip giant has already signed a similar agreement with Taiwan and is working with Taiwanese computer parts makers to ready the technology for inclusion in laptop PCs next year.

Taiwan's III worked with the Science and Technology Advisory Group, the Industrial Technology Research Institute (ITRI) and other government agencies to develop the MTube.

By Dan Nystedt, IDG news service

Clearwire back in the frame for an early 2007 IPO

Clearwire Corp planned to IPO earlier this year when it looked to raise around $400 million, then chipmaker Intel and cell phone manufacturer Motorola pumped nearly $900 million into the company.

It has legendary telecom executive Craig McCaw at the helm, years ago, McCaw cobbled together the U.S.'s first nationwide cellular empire, which he sold to old AT&T for $11.5 billion in 1994. Clearwire's shares are expected to be listed under symbol CLWR.

Another contender in the WIMAX space again going for an early IPO is NextWave, expected to trade under the symbol WAVE. Both companies hope eventually to make their money, at least in part, from building out WiMAX networks.

Market researcher Gartner Dataquest expects the North American WiMAX services market to swell from 30,000 connections in 2006 to 21.2 million by 2011.

On Sept. 21, wireless broadband gear maker Riverbed Technology priced above its expected range, and the company's shares have rallied over 200% since, indicating strong investor appetite for wireless broadband-related stocks.

A Wake-Up Call From Craig McCaw

From Business Week, July 18, 2006

Imagine a future like this: You’re on the Acela high-speed train from Boston to Washington and you want to touch base with friends in Beijing and London. You pull out your laptop and moments later are catching up via video link — even as the train thunders along at 150 miles an hour. Later, as you zip past the White House in a cab, you grab the same laptop to catch up on e-mail, then boot up your media player to watch a few minutes of the afternoon ball game of your hometown favorite, the Boston Red Sox.

If Craig O. McCaw gets his way, you’ll be able to do all that, and more, in as little as three years’ time. McCaw’s Clearwire Corp. has amassed enough licensed radio spectrum to create a nationwide, wireless broadband network based on an emerging technology called mobile WiMAX — a powerful cousin of WiFi. Clearwire got a big boost on July 5, when Intel Corp. (INTC ) and Motorola Inc. (MOT ) pumped nearly $900 million into the company. The tech giants aim to turn WiMAX into a mainstream consumer technology and hope to make lots of money selling the chips, laptops, cell phones, and other gear that work with it.

McCaw famously upended Ma Bell by building a cellular phone network in the 1980s, a business he later sold to AT&T (T ) for $11.5 billion. Now he could be poised to do much the same to today’s cable, satellite, and telecom players by providing a cheaper alternative to the broadband services they currently offer. “Filling a need that others aren’t addressing has always been a focus of the companies that I have been involved with,” McCaw says.

Not so long ago, McCaw’s WiMAX gambit seemed less threatening to the entrenched players. There were no industrywide standards for mobile WiMAX, so the equipment was too expensive to roll out on a large scale. But last year the industry adopted the long-awaited standards, which helped bring Motorola and Intel into the game. Add McCaw’s control of one of the biggest chunks of WiMAX spectrum, and he seems well positioned.

The cable guys and telcos profess themselves unfazed by McCaw’s WiMAX ambitions. But you can easily imagine people preferring to subscribe to a Clearwire service that allows them online access anywhere rather than one that restricts them to their home. What’s more, because WiMAX infrastructure is so much cheaper to build than traditional networks, Clearwire can likely afford to offer a nationwide mobile service for as little as $25 a month. Suddenly, paying $60 for Verizon Wireless’ (VZ ) Broadband-Access service looks a lot less attractive.

This is not just a question of luring away rivals’ subscribers, either. McCaw’s WiMAX play also could put in jeopardy the billions of dollars the telcos and cable companies are investing to make their broadband networks faster and more reliable. For example, Verizon is spending $20 billion to $40 billion to roll out fiber-optic lines to homes over the next 10 or so years. Meanwhile, the cellular carriers have spent comparable amounts on so-called 3rd Generation networks that are supposed to let subscribers watch “real-time” TV on their phones, among other things. WiMAX won’t necessarily make these investments redundant, but it could provide enough competition to make it hard for the carriers to recoup the billions spent.

DEFENSIVE MOVES
So is no one standing in McCaw’s way? Well, some of the key players are already making moves that could fend him off. The cellular carriers are working with PC makers to extend their broadband business beyond phones. Business commuters already are snapping up new plug-in modem cards that allow them to get online anywhere. Verizon Wireless and its ilk also have been cutting prices on both the cards and monthly broadband subscriptions.

And in November, Comcast (CMCSA ), Time Warner Cable (TWX ), Cox Communications, and Advance/Newhouse Communications cut a deal with Sprint Nextel Corp. (S ), the only other company with nationwide WiMAX spectrum. The partnership allows the cable guys to offer cellular phone service, key to competing with the telcos. But they also could resell Sprint Nextel’s WiMAX service or even buy some of its spectrum. “The [Sprint] deal lets cable providers keep their options open as far as wireless goes,” says Charles S. Golvin, an analyst for Forrester Research Inc. (FORR )

Then again, Clearwire is already forging strategic partnerships of its own. AOL, for example, resells the company’s WiMax service. Meanwhile, satellite provider DirecTV Group Inc. (DTV ) has expressed interest in WiMAX as a way to compete with the cable companies and telcos. And despite Sprint-Nextel’s deal with the cable guys, it would be premature to rule out a partnership between that company and Clearwire. Neither can offer complete national coverage, so they might be forced into some kind of a roaming WiMAX agreement.

With his enviable track record, vast spectrum holdings, and now huge war chest, McCaw’s Second Act is already well under way.

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News Corp. targets the WiMAX ZONE

News Corp. and its majority-owned DirecTV business are reportedly embarking on an ambitious plan to set up a nationwide WiMAX network in the U.S. through strategic partners.

Craig McCaw's Clearwire wireless broadband company that recently raked in $900 million from Intel and Motorola to deploy WiMAX nationwide maybe in the spotlight. Sources say News Corp. and DirecTV are in advanced talks with Clearwire for a project that could take at least two years and $2 billion to provide News Corp. and DirecTV with a valuable wireless interactive broadband loop the companies can use to sell content, goods, advertising and services directly to consumers.

Talk about a significantly better business case for WiMAX and for Clearwire, which is positioning itself as just another broadband service provider. With its valuable MySpace property, News Corp. has been rumored for some time to be interested in WiMAX, with some thinking it might build its own network or bid in the upcoming advanced wireless services auction.

It is the powerful, anywhere-anytime wireless connection that News Corp. aims to maintain with the core younger consumers of MySpace and its TV channels. In the process, News and DirecTV could leap ahead of many broadband distributors.

Having its own interactive pathway to consumers in the U.S. would put News Corp. in an elite class of major content providers that also own their own broadband platform that now includes only Time Warner, which boasts the Time Warner Cable pipes and a wealth of production, distribution and archive assets.

WiMax, which is short for World Interoperability for Microwave Access, also promises to provide more security and speed. McCaw, a cellular pioneer who sold his former company to AT&T a decade ago, has looked to Intel and Motorola to more than doubled the financial resources he planned to raised from going public with Clearwire, which he launched in 2003. That nearly $1 billion in funding is enough to deploy WiMax in several U.S. cities. Clearwire already provides WiMax service to several hundred cities in the U.S., Mexico, Ireland, Belgium and Denmark.