(Background)
I've been predicting that a arrangement between Sprint Nextel and Clearwire that effectively puts Sprint Nextel's extensive 2.5 GHz spectrum under the control of Clearwire, which can then go forth and deploy a truly national Broadband Wireless Internet Access service using Mobile WiMAX technology... is, simply, inevitable. All that remains is to work out the details of the arrangement that will preserve some profit / equity / branding for Sprint Nextel and some face-saving rhetoric for Sprint Nextel's abysmal failure to capitalize on the incredible opportunity of combining Sprint's and Nextel's (conglomerated from Worldcom and a few other companies) 2.5 GHz spectrum and more-than-good-enough technology (Mobile WiMAX) finally being available.
My most direct prediction of this was made December 27, 2007 - (Prediction) Clearwire Takes Over Sprint Nextel 2.5 GHz Spectrum - I don't see any way in which this isn't inevitable. Clearwire has the vision, but they'll need a lot more money, and although it's a bit nuts, Clearwire apparently still isn't deploying Mobile WiMAX in new markets. Sprint Nextel will struggle just to rationalize its Nextel 800 MHz conversion and its Sprint 1.9 GHz CDMA networks and streamline their overall businesses - it simply can't afford, or significantly fund Mobile WiMAX on 2.5 GHz spectrum - even if the strident shareholders were supportive, which they're not.
Summarized neatly on January 22, 2008 - Sprint Nextel reductions - you know there has to be a BWIA angle - ... My prediction stands that Sprint Nextel will essentially spin out Xohm and its 2.5 GHz spectrum into a joint venture with Clearwire, or dump it outright. There's simply too much corporate inertia at Sprint Nextel - invested careers and tribal knowledge, technological infrastructure built for "the core competency of a telephone company is to generate billable events", and the external pressures of "the good old days of the cellular business" for a Mobile WiMAX service, with its radical distillation of "telecommunications" into "Stupid Network", for Xohm to gain any significant traction within Sprint. ...
I also made some earlier mentions of the prediction a Sprint Nextel / Clearwire collaboration, led by Clearwire, was all-but-inevitable:
- December 4, 2007: Sprint keeps sending out feelers what to do about its 2.5 GHz spectrum - wither Mobile WiMAX? - ... Coldly realistically, Clearwire is the only company that can immediately exploit Sprint Nextel's 2.5 GHz spectrum, thus realizing the maximum immediate financial value to Sprint Nextel. If Sprint Nextel continues to dither, executing only half (hearted) measures such as merely deploying Mobile WiMAX in a few token markets, the financial value that Sprint Nextel could realize from its 2.5 GHz spectrum would considerably diminish. It's a Hobson's Choice for Sprint Nextel - it can bow to reality and sell off its 2.5 GHz spectrum to Clearwire, perhaps getting an equity stake in Clearwire's likely subsequent success in offering Mobile WiMAX services. If Sprint Nextel doesn't sell its 2.5 GHz spectrum to Clearwire, it risks damaging Clearwire (as the most viable, motivated, and entity most likely to offer top dollar), diminishes the overall value of its 2.5 GHz spectrum as investors come to realize that Sprint Nextel will just "sit on" the majority of its 2.5 GHz spectrum, and in the end, weakening Sprint Nextel even more. Yes, the proposed partnership with Clearwire was "too complex", but that partnership was the only viable scenario for Sprint Nextel to actually deploy a Mobile WiMAX network - in cooperation with Clearwire, not in competition with them. With the partnership with Clearwire no longer a possibility, Sprint Nextel needs to endure the pain of quickly divesting itself of the 2.5 GHz spectrum and get back to working on its many other challenges - migrating (its few, and shrinking) Nextel users off 800 MHz, continuing to build out its 1xEV-DO Rev. A network on 1.9 GHz spectrum, and try to regain some standing among consumers against marketing onslaughts from AT&T and Verizon Wireless. Confident prediction on my part - Clearwire (being driven behind the scenes by the Machiavellian Craig McCaw) will, in the end, end up controlling Sprint Nextel's 2.5 GHz spectrum. It's simply a matter of whether Sprint Nextel will bow to that reality and negotiate now, from relative strength, or McCaw ends up picking up Sprint Nextel's 2.5 GHz spectrum much more cheaply from a weakened Sprint Nextel in a corporate fire sale.
- November 12, 2007: Reader Question - ... I'll reiterate what I said on Friday, and will considerably elaborate in my other writing such as FOCUS and putting attention back into the Independent Clearwire Blog - that I don't know how, exactly it will happen, but I'm convinced that what will happen is that Clearwire will end up with unrestricted access to Sprint's 2.5 GHz spectrum and will use it to build out a nationwide Mobile WiMAX network that will offer not only mobile Broadband Internet Access, but also "telephony" services using Voice Over Internet Protocol (VOIP). I also think that backing this idea is the only logical path for Google's wireless ambitions: 1) they don't have to fight the stupidity of network neutrality conflicts of interest with Verizon and AT&T, 2) They get the benefit of "designed for IP" wireless technology, and 3) Clearwire's motivated - they need the money that Google can throw their way and Google can significantly influence the direction of Clearwire. ...
- November 9, 2007: Sprint Nextel has Clearwire right where Clearwire wants them - Last night the Wall Street Journal reported that Sprint Nextel and Clearwire have called off their proposed agreement to jointly build out a new, nationwide Broadband Wireless Internet Access network based on Mobile WiMAX technology. My take - this is just posturing, or more likely fumbling on the part of Sprint Nextel as they flail around trying to find a new CEO who can spin a good enough story to Sprint Nextel's board and shareholders that Sprint and Nextel's glory days can be restored. 1) Ain't gonna happen, 2) Sprint Nextel is under the gun, as a result of conditions it agreed to as part of the Sprint / Nextel merger, to actually deploy new services in its combined 2.5 GHz spectrum. Or else. 3) Clearwire's got the backing and vision to actually go build a nationwide Mobile WiMAX network; Sprint doesn't have a fraction of that vision and to do so, it's going to have to actively fight its most activist shareholders... riiiggghhhttt. Sprint will spin it, of course, but in the end Clearwire's going to end up with Sprint's 2.5 GHz spectrum. Sliding further out on my limb... my guess for Sprint Nextel's new CEO? Craig McCaw. Oops... he's already spoken for with Clearwire? Well, that problem is easily solved with the simple expedient of Sprint Nextel acquiring Clearwire. You heard it here first.
- November 2, 2007: WSJ Reports Sprint Considering Merger With Clearwire - ... First... my prediction is that Sprint will in fact bail out on WiMAX and essentially lease, sell, or merge their 2.5 GHz spectrum in a joint venture with Clearwire. Whatever form it takes, Clearwire's Craig McCaw's Machiavellian manipulations extending back close to a decade will come to fruition and he will be, defacto, in charge of the vast majority of 2.5 GHz spectrum in the US. It boils down to Clearwire's stockholders making a pure play bet on the ascendance of "pure" Broadband Wireless Internet Access and Sprint's stockholders fearing "a costly distraction from the carrier's core business". Clearwire stockholders kind of get it, but mostly they're betting on McCaw to "do it again! Sprint's stockholders don't understand that Sprint wireless services are technology-driven, and if you don't have the right technology, versus your competitors, you end up desperately scrambling to catch up; kind of like what the exodus of Sprint customers is indicating right now. ...
By Steve Stroh
This article is Copyright © 2008 by Steve Stroh except for specifically-marked excerpts. Excerpts and links are expressly permitted (and encouraged).
This article was written and posted via Broadband Wireless Internet Access (BWIA); Clearwire service using a NextNet Wireless / Motorola Expedience Residential Service Unit (RSU).
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