U.S. WiMAX Saved by $3.2 Billion Infusion

You can all Xohm now — and call it Clearwire. The much talked about WiMAX joint venture between Clearwire and Sprint Nextel is going to happen and the news is going to come as soon as tomorrow. The combined company is going to be worth $12 billion, The Wall Street Journal reports. Here are some facts:

  • Comcast is pumping in $1.05 billion.
  • Intel Corp. is putting in $1 billion.
  • $550 million will come from Time Warner Cable.
  • $500 million will come from Google.
  • $100 million will come from Bright House Networks.
  • The new company is also going to be called Clearwire.
  • Current Clearwire CEO Ben Wolff will also be the CEO of the new company, Craig McCaw will be chairman.
  • The service will offer voice service and broadband.
  • Cable providers will sell it under their own brand, with a re-seller agreement with the new Clearwire.
  • There is a good chance this service comes out before the wireless guys roll out their LTE networks.

Other details are sketchy, but here are my thoughts:

  • Sprint Xohm is dead.
  • Craig McCaw can chalk this up another win — he saved his near-disaster investment(s) in Clearwire with this deal.
  • Intel will throw mad money to save some of its investments, however foolish they might be.
  • McCaw & Wolff bluffed their way to a sweetheart deal. The cable companies, Google and Sprint are all playing from a position of fear. McCaw made AT&T buy his wireless operation, spend billions on it and then walked away, smelling very green. Same is true this time.
  • Many might see this as a win for Dan Hesse; I think of it as the start of one giant hack job in Overland Park, Kan. He will sell Nextel and be left with a puny Sprint that will eventually be sold to T-Mobile or someone willing to pay up just to shut up Wall Street.
  • You might want to recall the AT&T implosion and the end of Michael Armstrong, who had the right ideas at the wrong time. Of course, he listened to Wall Street too much.
  • The big winners will be the equipment providers: Motorola, Nortel, etc.

The elephant in the room:

This is a spaghetti-like mess of conflicts and self-interests. I wonder how open this network is going to be? Clearwire has a history of blocking other services such as VoIP carriers. Comcast is a known P2P offender. Will Google be our only search option?

The final word:

I told you so comes to mind 🙂