Clearwire-Sprint Deal Soon?

Unstrung.com had an interesting article yesterday regarding the 'on again, off again, on again' relationship between Sprint and Clearwire. They quote a recent report by Eric Kainer of ThinkEquity Partners, where he suggested that "is "close to the finish line" in striking a new network deal with Sprint, which would be financially backed by Best Buy, Google, and SK Telecom".

Kainer went on to speculate that a deal could be announced at the Mobile World Congress in Barcelona next week, or soon after. "I believe that's the most likely time for Clearwire to announce the deal," he says.

While many have believed that Google were looking to win the 700 MHz spectrum currently being auctioned, it is increasingly being suggested that they were really acting as a stalking horse, bidding to ensure that the bids went high enough to trigger the 'open access' provision. Now that bids have passed the $4.6bn reserve, Kainer suggests that they are turning their attention to the 2.4 GHz WiMAX spectrum that would be part of any Sprint / Clearwire relationship. The attraction to Google would be able to "support tens of millions of users" nationwide in 2009 as part of the Xohm venture, whereas any nationwide network utilizing the 700 MHz spectrum would not be ready for prime time until 2012.

Clearly, Google's deep pockets could significantly help the more financially-challenged Sprint and Clearwire fund the roll-out of the Xohm WiMAX network in a more timely manner. Only time will tell if this has been their plan all along.

As we've said before, NextPhase supports any initiative that accelerates the benefits of mass manufacturing, bringing down the cost of WiMAX CPEs (Consumer Premise Equipment). If you remember back to the early days of WiFi, CPEs were $500, and yet within a few years, they're built into everything and their effective price to the consumer is zero. The same will happen with WiMAX technology, and we predict that it will happen even faster. While early mass market devices will focus on the 2.4 and 3.5 GHz bands, we believe that chipsets that auto-detect / auto-adjust to any existing of future WiMAX bands (700 MHz to 6.1 GHz).

WiMAX ready for a big boost?

With all the recent activity surrounding the 700 MHz spectrum auction, there's been quite a lot of spillover to all things WiMAX. In particular, there has been a lot of renewed interest in Clearwire's on again, off again, on again discussions with Sprint. This time around, the rumors have them furthering their plans for a nationwide WiMax network by forming a joint venture with other companies such as Best Buy, Intel and Google. Only time will tell if there is anything to all of this, but the renewed interest has thrown a spotlight on the value of their 2.5 GHz WiMAX spectrum, and spectrum in general. Remember, as you read anything about the value of spectrum, that we've recently been awarded a nationwide license to provide WiMAX wireless services in the newly released 3.65 GHz band (3650-3700 MHz), in addition to the LMDS licensed spectrum covering four metro BTAs ( Los Angeles, California; Atlanta, Georgia; Miami/Fort Lauderdale, Florida; and Philadelphia, Pennsylvania/Wilmington, Delaware/Trenton, New Jersey) that we've secured from Nextlink. We'll be covering this issue in a subsequent post, in a lot more detail.

Separately, the Wall Street Journal ran a very interesting article on how some firms are trying WiMAX to boost their internet hook-ups. In it, they talk about the increasing numbers of small to medium businesses who are switching from traditional connectivity options to WiMAX services, citing flexibility, scalability, reliability and cost-effectiveness as the reasons for switching. They give several examples of companies who've successfully switched to WiMAX and pre-WiMAX services, either because their previous providers couldn't service their needs, attractive price / performance, or to provide redundancy (far too many companies only learn that their redundant copper circuits often go through the same conduits as their primary circuit, when someone inadvertently puts a backhoe through both of them).

Lastly, telecommunications market research and analysis firm Maravedis revealed their latest report, entitled WiMAX, LTE and Broadband Wireless Worldwide Market Trends 2008-2014. In it, they suggest that WiMAX subscribers will exceed 100 Million by 2014 as WiMAX and LTE technologies converge upon 4G technologies and markets. They're predicting that WiMAX chipsets will start to be embedded in laptops in the second half of 2008, into handheld devices in 2009, and into consumer electronics by early 2010. In terms of the two technologies, they suggest that WiMAX will have a distinct advantage over LTE, as the latter will probably not be available in significant volumes until 2012. What's also interesting is some of the data points that they've highlighted:

• The accumulated market size for combined demand and supply of WiMAX equipment will reach $42 billion by 2014.

• There were over 1,650,000 BWA subscribers, including 635,000 WiMAX subscribers, at the end of 2007.

• The combined BWA and WiMAX equipment market totaled US$1.2 billion in 2007.

• The mobile version of WiMAX (802.16m) in 2011 will challenge cellular phone volume dominance.