Sprint and Clearwire in US$3.2bn WiMax alliance

8 May 2008

US telecoms giants Sprint and Clearwire, as well as tech firms Intel, Google, Comcast, Time Warner and Bright House Networks, have agreed to invest US$3.2bn in a new mobile broadband company which will deploy a nationwide WiMax network to provide broadband to consumers and businesses.

The company, which will also be called Clearwire, will combine Clearwire’s existing consumer WiMax business with Sprint’s broadband infrastructure and 2.5GHz spectrum to create a new nationwide wireless broadband network.

On completion of the transaction, Sprint will be the largest stakeholder in the company with a 51pc equity stake. Existing Clearwire shareholders will own 27pc and the other investors in the group will gain 22pc of the company through their investment of US$3.2bn.

Intel chief executive, Paul Otellini, described the alliance as an historic step forward for WiMax in terms of deployment and growing industry support.

“WiMax will enable the mobile internet and is already opening doors to a host of new and exciting applications, devices and business models around the world.”

The new Clearwire expects to offer mobile wireless internet services on a broad array of new devices. This will be made possible by integrated WiMax chipsets, scalable operating expenses and a commitment to an open architecture.

Mobile WiMax is a standards-based wireless broadband technology designed to operate multiple times faster than today’s 3G wireless networks.

With embedded WiMax chipsets in laptops, phones, PDAs, mobile internet devices and consumer electronic equipment, mobile WiMax technology is expected to allow users to wirelessly access a range of multimedia applications, such as live videoconferencing, recorded video, games, large data files and more – anywhere in the network coverage area.

Google said the freedom of choice this new wireless world will afford consumers mirrors the openness principles underlying the internet and will enable users to get the most out of their wireless broadband experience.

“Google is a firm believer in supporting new ways for people to access the internet,” said Eric Schmidt, chief executive officer and chairman of Google.

“We are proud to invest in the new Clearwire, alongside several leading technology and communications companies, and we believe that its planned WiMax network will increase the ability for users to get high-speed broadband anytime, anywhere,” Schmidt added.

Under the terms of the agreement, Intel will work with manufacturers to embed WiMax chips into Intel Centrino 2 processor technology-based laptops and other Intel-based mobile internet devices, and will market the new company’s service in association with Intel’s performance notebook PC brand.

Google will partner with the new Clearwire company in the development of internet services, advertising services and applications for mobile WiMax devices. In addition, Google will be the search provider and a preferred provider of other applications for Clearwire’s new retail product.

Google will also partner with Clearwire on an open internet business protocol for mobile broadband devices. The new Clearwire will support Google’s Android operating system software in future voice and data devices it will provide to its retail customers.

Sprint, Comcast, Time Warner Cable, and Bright House Networks will enter into wholesale agreements with Clearwire, becoming 4G providers of Clearwire’s mobile WiMax service.

Comcast, Time Warner Cable and Bright House Networks and, after completion of the transactions, the new Clearwire, will enter into 3G wholesale agreements with Sprint, becoming bundled providers of Sprint’s wireless voice and data services. This will expand the reach of Sprint’s network to more customers, while providing the cable companies with a simpler, more effective vehicle to bundle wireless services.

Sprint and Google have also entered into an agreement related to Sprint’s mobile services, whereby Google will become the default provider of web and local search services, both of which will be enabled with location information, for Sprint. Sprint will also preload several Google services – including Google Maps for mobile, Gmail and YouTube – on selected mobile phones and provide easier access to other Google services.

Google and Intel have options to enter into 3G and 4G wholesale agreements with Clearwire and Sprint respectively but have no current plans to do so.

By John Kennedy