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June 2008 | Volume 11/ Number 6
The VoIP Authority

Sprint, Clearwire Resurrect WiMAX Plans

WiMAX (News - Alert) has seen its fair share of fits and starts over the past several years. And just when you thought it was curtains for the oft-maligned technology, it looks like it’s finally ready for prime time.

For starters, the analysts seem to think that the opportunity for WiMAX is big. In recently released analyses, Juniper Research (News - Alert) forecasted that by 2013, WiMAX will displace up to 12 percent of the global DSL installed base, with deployments in the Far East set to lead the pack with better than 20 percent of the projected subscriber base.

According to report author Howard Wilcox, “WiMAX will be an attractive offer in areas where there are no wired networks, and in areas where the existing DSL speed is suboptimal. WiMAX will solve the broadband access problem for users located at the fringes of DSL coverage. This is in fact the case in a number of developed nations such as UK, USA, Ireland and Scandinavia, and WiMAX network operators are deploying networks to address this market need. Additionally in developing countries, such as India, network operators are aiming to provide basic connectivity.”

Meanwhile, back on the home front, Sprint (News - Alert) and Clearwire made huge headlines with the news that they were resurrecting their plans to offer high-speed mobile Internet service based on WiMAX technology.

At the time of the announcement, Sprint and Clearwire also revealed investment from five key industry players: Intel Corporation, Google Inc., Comcast Corporation, Time Warner (News - Alert) Cable Inc., and Bright House Networks. All told, the companies have committed to a $3.2 billion investment in the new company.

Upon completion of the deal, Sprint will own approximately 51 percent equity ownership, existing Clearwire (News - Alert) shareholders will own approximately 27 percent and the new investors, as a group, will hold approximately 22 percent of the venture.

In an interview with TMCnet’s Mae Kowalke, St. John’s University Law and Business Professor Anthony Sabino said that it’s the big names — the investors and the personalities involved — that make this deal a blockbuster.

For example, Sabino said, it is significant that Craig McCaw (who built McCaw Cellular into a major cell phone company before selling it to AT&T in 1999 for $11.5 billion, and who is Chairman of the existing Clearwire Corp.) is putting his weight behind this deal.

“Here’s a guy with tremendous experience, and tremendous reputation in the field, aligning himself with these major players,” Sabino told TMCnet. “If anyone doubted that this technology had arrived, all doubts were erased. WiMAX is real and it’s here to stay. When you have this kind of backing, assuming the technology does not break down, they’re going to make it work.”

Among the more exciting developments resulting from the Sprint/Clearwire partnership, it was announced that Google (News - Alert) would play a major role in the development of Internet services, advertising services and applications for forthcoming mobile WiMAX devices. In addition, Google will be the search provider and a preferred provider of other applications for the new company’s retail product.

Writing on the Official Google Blog, Google product manager Larry Alder confirmed, “In addition to our $500 million contribution as part of the investment group, we will provide search and applications to the network’s users, and will work with Clearwire to offer additional services and applications. This will include jointly creating an open Internet protocol to work with mobile broadband devices (including Android (News - Alert)-powered devices) and implementing other open network practices and policies.”

Alder is excited by the opportunity. “We believe that the new network will provide wireless consumers with real choices for the software applications, content and handsets that they desire,” he said. “Such freedom will mirror the openness principles underlying the Internet and enable users to get the most out of their wireless broadband experience.”

Of course, the big news has had an immediate ripple effect in the industry, and not all of it is positive. For example, iPCS (News - Alert), an affiliate of Sprint Nextel, is suing the telecom giant because they believe that the deal with Clearwire violates an exclusivity arrangement that existed between the two companies allowing iPCS the right to sell wireless mobility communications network products and services under the Sprint brand in 80 markets.

On the positive side of the equation, the news did lift the financial fortunes of a number of companies associated with the technology.

As reported in Canada’s Financial Post, Canadian firms Craig Wireless Systems, DragonWave, Inc. (News - Alert), Redline Communications Group, and even Nortel Networks all stand to capitalize from the positive buzz generated by the deal. All of the companies enjoyed a lift in their stock prices after the Sprint/Clearwire deal was announced, with some significant financial repercussions. DragonWave shares jumped as much as 63 percent the day of the announcement and Redline saw its shares climb by almost 130 percent as a result of the news. IT

Greg Galitzine (News - Alert) is Editorial Director for TMC.

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