Skip the navigation

5 ways the Sprint-Clearwire drama might end

By Stephen Lawson
June 17, 2013 01:50 PM ET

"A soap opera on TV couldn't come up with more twists and turns," Recon's Entner said.

The battle could play out in any number of different ways, but here are five of the possible outcomes:

1. Sprint buys Clearwire and SoftBank buys Sprint

It may cost more than SoftBank or Sprint wanted to spend, but if the three companies can come together, they may have the best prospects for offering consumers a stronger alternative to the top two U.S. carriers. SoftBank's $8 billion investment in Sprint and its ongoing backing as majority owner could give Sprint the resources to compete more effectively with AT&T and Verizon Wireless. Sprint has less LTE spectrum than its bigger competitors today, but Clearwire's frequencies could give it much more capacity where it's most needed. SoftBank has experience with TDD (time-division duplex), the kind of LTE that Clearwire plans to use, and it's been a scrappy rival to bigger carriers before in its home market. Analysts expect innovation and price competition from this combination.

2. Dish buys Sprint and Clearwire

If Dish did win out, it would face some challenges, but don't count the newcomer out as a mobile player, analysts say. Dish has already won the right to use about 40MHz of its former satellite spectrum for mobile services, and it could combine that with Sprint's and Clearwire's. With its home broadband service and experience in the video business through satellite TV, Dish could bring new ideas and service combinations to mobile.

"I think it would be good for consumers, because it would be disrupting the market and pushing us toward a more innovative mobile broadband ecosystem," said Phil Marshall, an analyst at Tolaga Research.

Dish is already experimenting with a terrestrial fixed wireless service using spectrum in the same band where Clearwire's rich holdings lie, at around 2.5GHz. Last Thursday, Dish announced a trial in West Virginia of a fixed wireless service it built in conjunction with Ntelos Holdings. The trial network is delivering between 20Mbps and 50Mbps of bandwidth to initial test sites over frequencies in the 2.5GHz band, the companies said.

But after paying $25.5 billion for Sprint and Clearwire, Dish might not have the money to make its ambitious plans work, analysts said.

"The question is not, 'Can Dish buy them,' but 'Can Dish actually turn this company that they're buying into a viable competitor?" Entner said. "They would have to inevitably raise money to build out the network to be competitive."

3. Dish takes a minority stake in Clearwire

When it made its last bid for Clearwire, Dish said it was willing to settle for less than the whole company -- under certain conditions. It wants at least 25 percent of Clearwire's shares, the power to name three members to its board, and other rights such as approving all material transactions with third parties -- which would include any acquisitions of Clearwire.

Reprinted with permission from IDG.net. Story copyright 2014 International Data Group. All rights reserved.
Our Commenting Policies