Sprint Nextel is willing to increase the amount of money they've invested in Clearwire, the WiMax operator it helped create last year, and plans to maintain its 51% ownership in the company, Sprint CEO Dan Hesse said today.
Clearwire was formed from the wireless broadband company that bore the name and Sprint's own WiMax business. Despite $14.5 billion in initial funding -- including $3.2 billion from Google and several cable operators -- Clearwire's current war chest is not expected to cover the cost of its entire planned national network. Its WiMax network has officially launched in fewer than 20 markets and the company intends to reach as many as 120 million potential U.S. subscribers in 80 markets by the end of 2010.
"If the funding is not there, we are clearly willing and able to step up to our fair share of whatever that funding requirement is," Hesse said at the Goldman Sachs Communacopia conference in New York.
"Our goal with Clearwire is just that they keep building out that 4G network very, very quickly," Hesse continued.
The money Sprint invests in Clearwire is money it would otherwise be spending to build up capacity in its 3G network, Hesse said. WiMax, which is designed to deliver faster speed than Sprint's 3G EV-DO network, is a more economical way to build out mobile data capacity in a given market, he said. Clearwire says its network delivers between 4Mbit/sec. and 6Mbit/sec. to each subscriber.
"Once 4G is launched in a market, our [capital expenses] in that market basically stop," he said.
Hesse expects Sprint customers with 3G data cards and laptops to flock to the WiMax service, with built-in roaming capability on its 3G network, as soon as the network in each city is built out.
Hesse declined to comment on reports that his company is in talks to be acquired by Deutsche Telekom, but said he believes service providers would have a harder time consolidating under the Obama administration. They would probably face a more arduous federal approval process and have to make more concessions than before, he said.
"The smart money says that it'll be clearly more difficult to consolidate with the new administration than with previous administrations," Hesse said.