With Clearwire struggling to build out a next-generation network that will go up against Verizon Wireless (VZ) and AT&T (T) for future mobile customers, Sprint has little choice but to throw more money at it. But it’s not alone in doing so. Fellow partners Comcast (CMSCA), Time Warner Cable (TWC), Intel (INTC), Eagle River Holdings and Bright House Networks are also making additional investments, though together they total only $500 million.

Oddly absent from this list is Google (GOOG), which participated in a May 2008 investment round that pumped $12 billion into Clearwire but has evidently decided to sit this one out. Said Google spokesman Andrew Pederson: “We have already made a significant financial investment, and at this point we think the best way we can continue to add value is through continued product and strategic cooperation.”

One wonders if the shared mission of which the two companies boasted when the deal was announced has somehow changed in the ensuing year.

With $3.2 billion in investments from the likes of Comcast (CMCSA), Intel (INTC), Time Warner Cable (TWX), Google (GOOG) and Brighthouse Networks, the new Clearwire has quite a few masters to serve, though CEO Benjamin Wolff insists none will have a direct hand in the company’s operations. “We have very little in common with a joint venture,” he said during a conference call on Monday, claiming Clearwire’s investors have no say in the timing of network launches. Hard to believe that’s the case when a $1 billion investor like Intel holds a seat on Clearwire’s board. But if it is, Wolff’s lucky. Because with Verizon (VZ) and AT&T (T) planning to bring a competing fourth-generation network called LTE (long-term evolution) online in the next year or so, Clearwire can’t afford any unnecessary distractions lest it lose that all important time-to-market advantage. “The credit markets are lousy” will only work as an excuse for slowed deployment for so long …

Still, it sounds promising. With downlink speeds in the 2-4Mbps range, Xohm is about twice as fast as current cellular broadband networks. Sprint’s service plans include a $25 monthly home subscription, a $30 “on-the-go” plan and a $10 day-pass program. All three require a PC card or modem and a subscriber agreement permitting Xohm to “use various tools and techniques designed to limit the bandwidth available for certain bandwidth-intensive applications or protocols, such as file sharing.”

So much for that “open network” promise. Well, at least Xohm is up and running, right? Sprint Nextel (S) first announced plans to deploy a nationwide WiMax network in August 2006.

The alliance will see the four cable and tech companies investing $3.2 billion in the nationwide wireless network that Sprint and Clearwire have been struggling–with profound unsuccess–to roll out. Comcast (CMCSA) will contribute $1.05 billion, Time Warner Cable (TWX) $500 million. Intel (INTC) will invest $1 billion, Google (GOOG) about $500 million. The new venture will be majority owned by Sprint, but it will take the Clearwire name and be run largely by Clearwire execs, among them cellular industry pioneer Craig McCaw.

For the cablecos, which have yet to settle on a clear wireless strategy, the deal is a quick and dirty way to establish the high-speed wireless network they need to compete with telcos like AT&T (T) and Verizon (VZ). For Sprint and Clearwire, it’s a chance to make their non-starter of a WiMax network viable and something happy to talk about when conversation turns to Sprint’s stock price, which has fallen nearly 60% over the past 12 months.

That said, the deal is not without its problems–top among them WiMax itself. As Craig Moffett, an analyst with Bernstein Research, explained in a note to clients earlier this year, the 2.5 GHz spectrum upon which Sprint and Clearwire are building their network isn’t nearly as good as the spectrum Verizon and AT&T just purchased in the FCC’s 700 MHz auction. “Serious questions remain about penetration through walls and windows,” Moffett explained. “Elsewhere in the world, operators have also raised questions about WiMax’s real-world bandwidth, latency and non-line-of-site coverage. How competitive the offering would be versus Verizon’s or AT&T’s planned LTE broadband service therefore remains to be seen.”

That it does–though there have been some indications that it may not be quite up to par. Speaking at an international WiMax conference in Bangkok in March, Garth Freeman, CEO of Buzz Broadband, Australia’s first WiMax operator, described the technology variously as a “disaster,” “miserable failure,” and a standard “mired in opportunistic hype.”

So will that prove true for Clearwire as well? We won’t know for some time. Building out a massive network like this will take some doing. “We’ll likely to see early trials in 2010, but a full-fledged build-out will take longer,” Clearwire CEO Benjamin Wolff said during a conference call this morning. “Building faster is a matter of logistics. The build plan we’ve laid out will be one of the largest and fastest build-outs ever done. We have the capability to do it, but it’s a massive undertaking.”

Not the most attractive of acquisition targets. But beauty is in the eye of the beholder, in this case T-Mobile parent Deutsche Telekom (DT) which is reportedly considering a bid for the wireless outfit, whose worsening losses have left it ripe for a buyout. By swallowing Sprint (S), DT could gain some spectrum in the States and stave off a price war between the mobile carriers, or so the “thinking” goes.

Thing is, an acquisition of Sprint entails an acquisition of Sprint’s problems–and there are many. It would also require DT, which operates a GSM/EDGE network, to manage Sprint’s 3G CDMA network and Nextel’s legacy iDEN system. That’s three different network standards. And then there’s Sprint’s WiMax operation, XHOM, to deal with. That’s the makings of a real Greek tragedy of a business story right there. Said Avian Securities analyst Matthew Thornton, “While the differing network technology standard does not necessarily eliminate the possibility of a deal, it does significantly raise the costs and complexity of the combination.”

Michael Nelson, an analyst at Stanford Group, agreed. “You really cannot underestimate the level of complexity that that entails,” he told Bloomberg. “There is a significant amount of integration risk.”

We are now delivering the promise of WiMAX–high-speed, cost-effective wireless broadband access–to businesses and consumers in cities and suburbs around the world.”

– Scott Richardson, general manager of Intel’s Wireless Broadband division, gets a little ahead of himself in November 2005.

Sprint (S) appears to be rethinking its decision to pull the plug on its WiMax joint venture with Clearwire (CLWR) last fall. Word on the street has it that the two companies are finalizing a partnership to build a nationwide mobile broadband network based on the technology. A joint venture between the two could be announced in a matter of days. And if it is, it may involve a $2 billion cash investment from Intel (INTC).

As it well should. It was Intel, after all, that called WiMax “the most important thing since the Internet itself.” Course, it might as well have said the same thing about time travel, because neither are exactly widely available today.

Now, to what could these banners possibly be referring? Streaming iTunes movie rentals to the Apple TV? A genetically modified iVirus? The iSmell? A featherlight subnotebook? Or something else entirely? Say a WiMax-enabled MacBook Pro?

Rumors of Forsee’s imminent resignation began ciriculating earlier this month when The Wall Street Journal reported that activist investor Ralph Whitworth had lost confidence in Forsee and was threatening a proxy fight for board seats unless Sprint dealt with the situation “immediately.” Apparently, the board took Whitworth’s warning to heart. In a statement, Sprint board member Irvine Hockaday said “the decision to seek a new CEO was based on the board’s belief that it is the right time to put in place new leadership to move the company forward in improving its performance and realizing corporate objectives.”

That and the roughly 10% decline in Sprint’s share price over the past two years.

Anyway, with Forsee out of the way, the search for a new CEO is on in earnest. But it won’t be easy. Finding someone to burnish Sprint’s fortunes, stop the bleeding in its core cellular business and make good on its WiMAX promises is a daunting task to say the least. “There’s no silver bullet the new management team can bring in,” said Pacific Crest Securities analyst Steve Clement. “Things are still in limbo.”

To keep you abreast of tech news while he’s away, we’re compiling a daily digest of 10 must-read tech stories. We’re calling it the Tech 10 and it will appear in Digital Daily.

1. Dell says it will restate financial results after an internal audit finds evidence of irregularities going back several years. The adjustment will reduce the company’s profit by $50 million to $150 million.



2. Though some Skype users report being able to log on after a major outage yesterday, many users of the VOIP service remain in connectivity limbo as the company struggles to resolve what is presumed to be a software problem.
3. Despite the lingering hangover from its board-leak counterintelligence scandal, Hewlett-Packard reports robust third-quarter earnings, based largely on lower computer-component costs.
4. Computer rivals IBM and Sun Microsystems will collaborate on server technologies. The move means Sun’s Solaris operating system will be able to run on Big Blue’s servers.
5. Sprint announces it will spend $5 billion on its upcoming WiMax service dubbed (somewhat unpronounceably) “Xohm.”
6. Crying patent infringement, Nokia wants U.S. authorities to halt imports of Qualcomm’s chips and the cellphones they’re used in. The world’s largest cellphone maker is in a legal fray with Qualcomm since a deal over patents expired on April 9. Meanwhile, Nokia has warned its handset users that defective batteries pose a potential danger, offering to replace them in a voluntary program.
7. Strong sales of its Mac and iPhone are giving Apple renewed momentum, says RBC Capital’s Mike Abramsky, who maintains that shares of the computer-maker’s stock could eventually hit $175.
8. MTV Networks will pump $500 million into video-game development based on the network’s range of shows over the next two years. The investment comes as the traditional media company attempts to gain a toehold in the $30 billion global games market.
9. It looks like there’s upheaval at Technorati. The blog-search service is reportedly laying off eight people, and CEO David Sifry is resigning.



10. Today marks the 25th anniversary of the compact disc, the format that triggered a revolution in the recording industry and one that remains the principal means for consumers to listen to music, despite the growing popularity of digital downloading.

–posted by Associate Editor John Sullivan

]]> http://digitaldaily.allthingsd.com/20070817/the-tech-10-dell-redoes-the-math-skype-gripes-and-h-p-has-a-great-q3/feed/ 0 http://digitaldaily.allthingsd.com/20070802/google-phone/ http://digitaldaily.allthingsd.com/20070802/google-phone/#comments Thu, 02 Aug 2007 15:32:35 +0000 John Paczkowski http://digitaldaily.allthingsd.com/20070802/google-phone/ In the lexicon of Google nondenial denials, “we’re not doing a mobile phone” is right up there with the great ones: “We don’t think it’s a competitor to Microsoft Office”; “We do not intend to offer a person-to-person, stored-value payments system“; and, of course, “We have no plans for an IPO.”

According to people familiar with Google’s plans, the company is indeed working on a mobile handset. “Google has invested hundreds of millions of dollars in the cellphone project,” The Wall Street Journal reports. “It has developed prototype handsets, made overtures to operators such as T-Mobile USA and Verizon Wireless, and talked over technical specifications with phone manufacturers. It hopes multiple manufacturers will make devices based on its specs and multiple carriers will offer them.”

Interesting, eh? You know who else probably has a few of those prototype handsets? Sprint Nextel. Remember, Google did announce an alliance with the carrier last week, one that will see the two companies working together to bring Google’s search, digital-mapping technologies and GTalk chat service to Sprint’s WiMax network. Five dollars and an Eric Schmidt bobblehead says if and when Google-customized phones do arrive at market, they run on Sprint’s high-speed wireless network first.

]]> http://digitaldaily.allthingsd.com/20070802/google-phone/feed/ 0 http://digitaldaily.allthingsd.com/20070726/google-sprint-wimax/ http://digitaldaily.allthingsd.com/20070726/google-sprint-wimax/#comments Thu, 26 Jul 2007 19:16:47 +0000 John Paczkowski http://digitaldaily.allthingsd.com/20070726/google-sprint-wimax/

Given Google’s well-documented efforts to set up a free Wi-Fi network in San Francisco, we believe the upcoming spectrum auctions could represent a rare opportunity for the company to acquire something resembling an exclusive (licensed) nationwide WiMax footprint, and largely eliminate any access dependency on third parties. As such, we believe Google’s potential involvement bears watching, especially in light of the fact the company has shown little hesitation in delving into the other aspects of networking. Google’s selection of equipment vendors, such as Force10 and Infinera, indicate to us a willingness to embrace leading-edge technologies, and we believe WiMax fits that description.”

–Joe Chiasson, Susquehanna Financial Group, February 2006

This morning Google announced an alliance with Sprint Nextel that will see the two companies working together to bring Google’s search, digital mapping technologies and GTalk chat service to Sprint’s WiMax network, which, once it’s completed, will theoretically allow wireless Web access at speeds and prices similar to cable connections.

The deal follows the announcement of Sprint’s plans to collaborate with Clearwire to build out a nationwide WiMax network by the end of 2008. It also follows Google’s conditional pledge to drop at least $4.6 billion on the Federal Communications Commission’s auction of the 700-megahertz spectrum, which has long been said to be the future of WiMax (with fewer line-of-sight issues and wider coverage and better building penetration).

Coincidence? Or part of a master plan in which Google wins the 700-megahertz spectrum, uses it to help complete the Sprint/Clearwire nationwide WiMax network effort and then announces the long-rumored Google Phone–upending the telco-cable duopoly in the process?

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