Named Clearwire, the new company will focus on expediting deployment of the first nationwide WiMAX network to provide widespread mobile broadband.
WiMAX (Worldwide Interoperability for Microwave Access) is designed to provide wireless connections over long distances and is faster than today's 3G networks. With embedded WiMAX chipsets in laptops, phones, PDAs, mobile Internet devices and consumer electronics equipment, WiMAX is expected to allow users to wirelessly access a range of multimedia applications such as live videoconferencing, recorded video, games, large data files, and more — anywhere in the network coverage area.
Sprint and Clearwire also announced that Intel, Google, Comcast, Time Warner Cable, and Bright House Networks have agreed to invest $3.2 billion into the new Clearwire.
Sprint will have the largest stake in the new company at 51 percent. Current Clearwire shareholders will own approximately 27 percent, and the investors will have approximately 22 percent as a group.
The Power of the Mobile Internet
The new Clearwire expects to offer mobile wireless Internet services on new devices that integrate WiMAX chipsets and an open architecture.
“We've made an excellent start developing XOHM WiMAX services. Contributing those advances to a strongly backed new company — in which we'll hold the largest interest — provides Sprint with additional financial flexibility and allows Sprint management to leverage and focus on our core business,” said Dan Hesse, president and CEO of Sprint.
Hesse said the agreements allow the new company and its investors to bundle and resell Sprint's third-generation wireless services, strengthening distribution while reducing complexity and enhancing cable relationships.
Enviable Support
The new Clearwire has enviable support from its partners. Google will work with the new company on an open Internet business protocol for mobile broadband devices. Clearwire will support Google's Android mobile platform in future voice and data devices offered to customers.
“Google is a firm believer in supporting new ways for people to access the Internet,” Google Chairman and CEO Eric Schmidt said. “We believe that its planned WiMAX network will increase the ability for users to get high-speed broadband anytime, anywhere.”
Intel will work with manufacturers to embed WiMAX chips into Intel Centrino 2 processor laptops and other Intel-based mobile Internet devices, and will market the new company's services in association with Intel's performance notebook PCs.
“This agreement is a historic step forward for WiMAX, as it represents the first nationwide deployment of a next-generation mobile broadband Internet in the U.S.,” said Paul Otellini, Intel president and CEO. “The agreement also signifies growing industry support for WiMAX. Given its flexibility, coverage and speed, WiMAX will enable the mobile Internet and is already opening doors to a host of new and exciting applications, devices and business models around the world.”
Overcoming WiMAX Challenges
There is clearly demand for mobile broadband, according to Michael Gartenberg, a wireless analyst at JupiterResearch, but there are also clear challenges. The bottom line, he said, is the new Clearwire has to find a business case that makes sense in the face of global deployment hurdles.
“There is the question of whether the WiMAX initiative can avoid some of the early difficulties Wi-Fi experienced. It was difficult to set up. There were operability issues. There was interference,” Gartenberg said. “If it really becomes a wide-open network that doesn't change anyone's individual use in order to benefit everyone, then it's interesting.”
There is also a question of whether consumers will be willing to pay for new WiMAX-enabled devices and whether handset makers are willing to install WiMAX chips when Wi-Fi is so ubiquitous.
“At the end of the day, Sprint is going to have to compete with the mobile broadband companies to some extent and with other carriers with cable offerings to some extent,” Gartenberg said. “There are a lot of challenges out there, but certainly this looks like a good set of partners to at least get the WiMAX possibilities going.”
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