The mainstream media is abuzz this past week with rumors and "sources" stating that an arrangement between Sprint Nextel and Clearwire is "close" to fruition.
I've been saying that there will be such an arrangement - that it is inevitable, for months now.
To me, the "if" isn't in question. The only questions are the details about branding, customer ownership, ownership of spectrum and network, and when the arrangement will be consummated.
So, let's try to parse out some of those details from the mainstream media.
MSM datapoint: The "arrangment" will be embodied into a new company that will take control of both Sprint Nextel's and Clearwire's 2.5 GHz spectrum. (Source - Sprint, Clearwire Near WiMAX Deal)
SKS analysis: This is another opening feint. 2.5 GHz / Mobile WiMAX is a distraction for Sprint from what its managment, majority of personnel, and its investors view as its core business - wireless telephony and Broadband Internet Access over Wireless Telephony. Clearwire will come to dominate the new company. Also, neither company is actually going to "give up title" to itss respective spectrum - it's just too scary to contemplate "letting go" of spectrum assets.
MSM datapoint: Some of the funding for the new
Sprint Nextel / Clearwire 2.5 GHz Mobile WiMAX company will come from a $2B investment from Intel. (Source - Sprint, Clearwire Near WiMAX Deal)
SKS analysis: This kind of makes sense... but neither company is
actually going to "give up title" to its respective spectrum - it's
just too scary to contemplate "letting go" of spectrum assets. There will be other interested investors weighing in. Google will have $6.5B or so to find something to do with after losing the bidding for 700 MHz spectrum, and it makes much more sense to invest in a serious deployment of mature (enough) 2.5 GHz Mobile WiMAX nationwide network (190 MHz band) than to try to build out a 700 MHz (12 MHz band), or fund one, from scratch.
MSM datapoint: Best Buy is also part of the discussion and a potential investor in the new company. (Source - WSJ, 2008-01-30, Sprint Nextel in New WiMAX Bid)
SKS analysis: Best Buy already has an arrangement with Clearwire to resell Clearwire Broadband Internet Access service, and several years ago it bought Speakeasy, which resells wireline Broadband Internet Access and Voice Over Internet Protocol (VOIP) telephony services. Being able to sell a Best Buy branded version of Mobile WiMAX service would give Speakeasy increased leverage with the wireline providers it is currently forced to deal with between its services and its customers.
MSM datapoint: SK Telecom might be an investor in the new company (Source - Clearwire & Sprint: On Again?)
SKS analysis: SK Telecom is looking for a reason to salvage the US Helio Mobile Virtual Network Operator (MVNO) service in the aftermath of Earthlink's pullback. SK Telecom being based in Korea, one of the hottest countries for Broadband Internet Access, and with deep knowledge of the WiBro precursor to Mobile WiMAX, understands the inherent advantage of a truly-built-for-Broadband-Internet wireless system. SK Telecom / Helio would be a natural partner for a national Mobile WiMAX network in the US.
MSM datapoint: Clearwire gets bailed out because it doesn't have nearly enough funding currently in hand to go through with building out Mobile WiMAX in new markets, let alone rebuilding all of its existing markets with Mobile WiMAX systems. (Source - Sprint, Clearwire Near WiMAX Deal)
SKS analysis: Clearwire never did have enough money to deploy all the markets in which it had spectrum, so this was part of Clearwire's plan all along. It knew it would need to partner; it was just a matter of finding the right partner with deep enough pockets and "right" attitude... like the AT&T of old buying McCaw Cellular.
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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