Update: Clearwire, Sprint close WiMax deal

They're building a nationwide network with Intel, Google and three cable operators

Sprint Nextel Corp. and wireless WAN operator Clearwire Corp. have completed a deal to create a new company and build a nationwide WiMax network with help from Intel, Google and three cable operators.

The deal, announced in May, brings together Sprint's and Clearwire's radio spectrum holdings and fledgling WiMax operations under a new company that will retain the Clearwire name. The new company also said it has received a previously announced investment of $3.2 billion from Intel, Google, Comcast, Time Warner Cable and Bright House Networks.

Clearwire plans to offer a mobile WiMax service, called Clear, with average downstream speeds of 2Mbit/sec. to 4Mbit/sec. The merged spectrum holdings give the new Clearwire 100 MHz or more of spectrum in most markets across the U.S., according to the company. Sprint's WiMax service in the Baltimore area, under the Xohm brand name, will gradually transition to the Clear name. As Clearwire converts its pre-WiMax mobile broadband services in several markets to standard WiMax, those will take on the Clear name as well, the company said.

The new venture aims to offer an alternative to traditional mobile services from carriers as well as wired broadband. It promises to make its client devices available through retailers, with no carrier subsidy and no term contracts for subscribers, as well as unfettered standard Internet access.

WiMax offers higher speeds than typical 3G (third-generation) mobile networks and is the only so-called 4G technology commercially available until LTE (Long-Term Evolution) goes on sale, probably in 2010 or later. But the ailing Sprint only began its long-delayed commercial Xohm service in late September and currently offers it only in Baltimore.

"This transaction gives Clearwire the opportunity to reinvent wireless," Clearwire CEO Benjamin Wolff said in a webcast Monday morning. "We fully understand that we are the underdog."

Clearwire hopes to offer a better experience for less money than cellular carriers, thanks to industry-standard equipment and a network based fully on Internet Protocol. The service launched by Sprint in late September starts at $35 per month for stationary use and $45 per month for mobile use.

Both transactions closed without any material changes in terms, despite the upheaval in the financial markets since May, Wolff said. An additional, previously announced investment, from Trilogy Equity Partners, is coming in the next few months, according to Clearwire.

Wolff will continue as CEO alongside Perry Satterlee, who will remain chief operating officer. Barry West, who ran Sprint's Xohm operation, is now president and chief architect at Clearwire, and Atish Gude, another former Xohm executive, is now senior vice president and chief marketing officer. Clearwire's board includes executives from Intel and Trilogy. But the company is independent from its corporate shareholders and can make its own decisions regarding where and when to build networks, Wolff said.

More decisions on when to roll out planned commercial services in Chicago, Washington, D.C., and other locations will come after the first meeting of the board, which hasn't been fully named, Wolff said. But Clearwire plans to convert most of its existing pre-WiMax networks, located in 46 markets, to standard mobile WiMax next year.

A major problem for the fledgling network is that while it is mobile, so far it's available only in one metropolitan area. To help make its service viable for customers who frequently travel, Clearwire can offer combination 4G and 3G services under its own name, on Sprint's network, using dual-mode devices, Wolff said. He said more information on those services will come early next year.

Clearwire expects any WiMax-certified product to work on its network and said more than 80 device vendors are offering or developing WiMax products. Among the devices offered for the Clear service will be ones based on the Android platform from Google, Wolff said. Google also will be a partner providing content and applications to users of the service.

The company's cable partners all are expected to become wholesale customers reselling WiMax under their own names in bundles for their subscribers, he said. There are about 100 million consumers in the homes served by those cable operators now, Clearwire said.

Clearwire's first priorities will be to establish common infrastructure and a common core for Sprint's and Clearwire's networks, as well as a common back-office infrastructure for functions such as billing. Subscribers in the company's first commercial market, Baltimore, will see no interruption or change in their service, the company said.

Copyright © 2008 IDG Communications, Inc.

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