Like the offspring of a swan that's been dosed with radiation, WiMAX is back and it's bigger than ever. After Sprint Nextel (NYSE: S) and Clearwire (Nasdaq: CLWR) failed in their last teaming to deliver a nationwide WiMAX network rollout, the two wireless firms brought in some friends to form a new venture designed to deliver next-generation mobile broadband services.
The new consortium has various players contributing either assets or cash. As many have speculated, Sprint Nextel needed to offload the burden of its WiMAX division to focus on its flailing core business. With the lucrative spectrum assets that the company is contributing to the new venture -- called Clearwire -- Sprint Nextel will get a 51% stake.
Another 22% goes to Intel (Nasdaq: INTC), Google (Nasdaq: GOOG), Comcast (Nasdaq: CMCSA), Time Warner Cable, and Bright House Networks, which collectively chipped in $3.2 billion in cash. The other 27% ownership will go to the current Clearwire, which is contributing its assets as well as some of the top leadership in the new venture.
The partnership is a very complex arrangement that still has to cross many hurdles. While it will take the rest of this year to close, if successful it will give the WiMAX platform a significant boost in the U.S. market.
Whenever discussing the wireless market at conferences or meetings, I'm hit with questions along the lines of "Do you think WiMAX will succeed?" Over the years of ups and downs in its rocky birth, I've always answered "Absolutely. Too many big backers refuse to let WiMAX fail."
The reason why WiMAX won't die is because it is not just a technology -- it's an ecosystem that allows today's computing and multiservice titans an avenue into the lucrative telecom market. WiMAX is all about wresting power away from the AT&Ts (NYSE: T) and Verizons (NYSE: VZ) of the world. Consider this: If Verizon was really serious about a truly open network, Google wouldn't be forking over half a billion dollars to support the new Clearwire.
The partnership is promising that consumers will see WiMAX-based services on a wide scale in the next few years. While that may be true, it's far too early to even speculate whether these companies will earn a good return on their investment.
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