Too Many Cooks in the Sprint/Clearwire Kitchen?

Carl Weinschenk

This week, Clearwire and Sprint resurrected their WiMax deal, with assorted other companies of note thrown in for good measure. Initial reaction from some quarters is that the deal is ill-conceived. That would be too bad. The fate of WiMax in the United States will in large measure be determined by the new company, which will retain the Clearwire name.

 

Clearwire will be 51 percent owned by Sprint and 27 percent will go to current Clearwire shareholders. Other players -- Intel, Comcast, Time Warner Cable, Bright House Networks and Google -- will collectively hold a 22 percent stake based on a $3.2 billion investment, Bloomberg says. The new company will be valued at $14.5 billion. More details on the structure of the deal are available here.

 

Much of the telecommunications industry has been pointing to WiMax as the wireless networking technology of the future for a half-decade. The new entity -- more than Sprint's current (and delayed) Xohm project, the current Clearwire's pre-WiMax technology or the trials and launches ongoing around the world -- will determine whether the technology grows to be a major or niche player.

 

The bottom line is that the new Clearwire will have the money and the brains -- and no excuses if the project fails. And it may. Erick Schonfeld at TechCrunch reiterated the criticism he leveled the first time the deal was broached. Essentially, he sees too many powerful companies with different agendas. The cable companies, he says, are unlikely to gain what they apparently want, which is a wireless phone and broadband technology to counter the telcos' encroachment on their video turf.

 

Om Malik at GigaOm also is negative about the deal. After a series of bulleted first reactions -- most of which have a negative slant -- Malik echoes Schonfeld when he suggests that the deal "is a spaghetti-like mess of conflicts and self-interests."


 

UC Strategies' Michael Finneran clearly is not as negative as Malik or Schonfeld, but he doesn't lavish praise on the deal either. He notes that the rollout plans are being pushed from 2008 to 2010, which will obviate the time-to-market advantage WiMax has over its closest competitor, Long Term Evolution (LTE). He also says that roaming will be accomplished using slower 3G technology, though he doesn't elaborate.

 

The bottom line is that a deal is necessary to push WiMax into the next phase of its development. The big question is whether the companies can keep their corporate aims and egos in check. If the past is prologue, it just may be that -- as Schonfeld wrote -- there are just to many cooks in the kitchen to make this version of Clearwire work.



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