As we speculated in an earlier post, the new company, to be named Clearwire, will receive a $3.2 billion investment from Intel Corp., Google Inc., Comcast Corp., Time Warner Cable Inc. and Bright House Networks. The investment is based on a target price of $20 per Clearwire share and will give the companies a 22 percent stake in the new venture. Sprint Nextel Corp. will be majority owner with a 51 percent equity stake, while existing Clearwire shareholders will receive about 27 percent interest.
The new company is looking for a U.S. network deployment between 120 million and 140 million people by the end of 2010, and is expecting to start rolling out service by the end of the year.If you look a little more closely at the structure of the deal, all of the partners have something to gain from making this work. Sprint will be able to resell Clearwire's WiMAX services, the new Clearwire will be able to resell 3G services on Sprint's existing network, and cable operators will be able to resell Sprint voice, 3G, and WiMax, which allows them to have a quintuple play (voice, data, and video over cable, plus mobile voice, and mobile data). While Intel and Google also both have an option to resell services, the real advantage for them is getting their respective technologies and brands in the next generation of "any time, any place, any device" broadband services.
For the smaller guys in the industry, like ourselves and Towerstream, this is going to be interesting. After a very slow start (the industry is currently about two years behind on the original timeline), momentum is picking up for WiMAX, and this latest move can only accelerate things further. Given the seemingly unquenchable thirst for bandwidth, the demand for mobility, and the fact that existing wired infrastructure is running out of steam and can't keep up, the new Clearwire has a real opportunity to clean up.
Given that Clearwire will continue to focus on the residential market, and we focus on the business market, we don't see them as competition. We see them as WiMAX 'evangelists', enthusiastically promoting and supporting WiMAX technologies, and we're happy to let them use their marketing budgets to educate the marketplace, increasing awareness and acceptance. That will allow us to focus on selling the unique benefits of WiMAX technologies (scalability, flexibility, low deployment costs, rapid deployment time, and superior price/performance), and how they can benefit business customers.
