Sprint to beef up wireless venture
Sprint Nextel Corp. plans to combine its costly wireless broadband effort with a smaller company founded by cellphone pioneer Craig McCaw in a $12-billion venture funded by Internet search powerhouse Google Inc., cable television companies and others.
The combination would create the fastest nationwide wireless network for laptops, smart phones such as BlackBerrys and other mobile devices, as well as desktop computers and in-home electronics.
“This would offer an opportunity to get true broadband to any device,” said RBC Capital Markets analyst Jonathan Atkin.
Sprint and McCaw’s Clearwire Corp. would contribute wireless spectrum that would use the super-fast WiMax technology that both companies have long promoted, said three people familiar with the plans who didn’t want to be identified because last-minute snags could derail the project.
Intel Corp., a leading WiMax proponent, and cable TV company Comcast Corp. would put in about $1 billion each, and Google and Time Warner Cable Inc. would chip in about $500 million each, the three people said. All of the companies declined to comment.
The new financing, which could be announced as early as this morning, would make it much more likely that more consumers would have access to high-speed, roaming Internet connections sooner than if Sprint had continued on its own.
The name of the new venture wasn’t disclosed.
Sprint, based in Overland Park, Kan., has backed WiMax even as others in the telecommunications industry, including larger carriers AT&T; Corp. and Verizon Wireless, have coalesced around an alternative system that isn’t as far along the development path.
The broader support from cable companies removes one of the clouds hanging over Sprint, which has been distracted by a variety of operational and financial issues.
Sprint announced a mammoth $30-billion charge in January stemming from its much-plagued acquisition of Nextel in 2005.
This week, Sprint has been reported as studying a sale of Nextel and as being a possible acquisition target for German telecommunications giant Deutsche Telekom.
Sprint’s arrangement with Clearwire, based in Kirkland, Wash., had been the subject of protracted negotiations over the size of the investments and control of the company because it would unite the efforts of companies that might compete in distributing high-speed services, the three people said.
While Sprint would own the majority of the venture, the operation would be steered by McCaw, who would serve as chairman, and Clearwire Chief Executive Ben Wolff, who would take the same position at the venture, they said.
That structure is designed to make sure the venture can compete against all comers, including any offerings from Sprint, the people briefed on the plans said.
Details on how and when the technology would be brought to the marketplace weren’t clear, but analysts said they presumed that the cable companies were interested because they would get the right to sell the high-speed wireless Internet access in a package with pay TV, cellphone and home phone service.
That so-called quadruple play would help them compete with phone companies that also are rolling out pay-TV service. The cable firms also may push video content packages for souped-up phones or a new generation of devices that are somewhere between phones and laptops, Atkin said.
“This ultra-fast wireless data and Internet service for cellphones and laptops and wireless devices makes enormous sense,” said independent telecom analyst Jeff Kagan.
Intel makes processors that handle WiMax communication.
Google’s involvement, meanwhile, hinged on the venture agreeing to let any device and any service use the network when it emerged, according to a person familiar with the terms of its investment.
That follows Google’s success in getting federal regulators to declare another chunk of the high-speed airwave spectrum open to any form of consumer use.
Both actions result from Google’s opposition to the traditional wireless model, in which carriers dictate what phones and what services are permitted to interact over their networks.
Google wants to make sure consumers can access Google’s search, mail and other services while on the go. It is also developing an operating system for mobile phones that has attracted wide interest from the carriers.
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