Sprint Taps Investors To Launch Mobile WiMAX

By Joseph Palenchar On May 19 2008 - 6:00am

Wireless-broadband provider Clearwire and ailing wireless carrier Sprint Nextel will merge their WiMAX businesses to create a new company whose investors will include Intel, Google, and cable operators Time Warner Cable, Comcast and Bright House Networks. The investors will inject around $3.2 billion in the new company, which will be called Clearwire.

The creation of the new company, expected to be completed in the fourth quarter, is promoted as accelerating the introduction of Mobile WiMAX service in the United States. Sprint and Clearwire will combine their spectrum and target a network build out covering 120 million to 140 million people by the end of 2010.

Once the deal is completed, Sprint will own around 51 percent of the company; existing Clearwire shareholders will own 27 percent, and the other investors will hold 22 percent.

Under the terms of the deal:

  • Sprint and the cable companies will enter into wholesale agreements with the new company to sell Mobile WiMAX service;

  • the cable companies and the new Clearwire will resell Sprint's 3G wireless voice and data services, providing the cable companies with "a simpler, more effective vehicle to bundle wireless services" than they previously had with Sprint;

  • Google and Intel get options to resell the Clearwire and Sprint services but don't have any current plans to do so, they contend;

  • Google will become the default provider of Web and local search services for Sprint's 3G services. Sprint will also preload several Google services on select handsets;

  • Intel will work with manufacturers to embed WiMAX chips into Intel Centrino 2 processor technology-based laptops and other mobile Internet devices;

  • Google will partner with Clearwire to develop Internet services, advertising services and applications for Mobile WiMAX devices. Google will also be the search provider and a preferred provider of other applications for Clearwire's retail product; and

  • Clearwire will support Google's Android operating system.

Last year, Sprint and Clearwire signed a letter of intent to jointly build a national network and market the service under a common brand, but they later tore up the letter.

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