After several weeks of rumors, Sprint Nextel and Clearwire Corp. have announced they will jointly construct a nationwide mobile WiMAX network, market service under a common brand and work together on distribution.
In June a press leak that the planned 4G mobile WiMAX network announced by Sprint last summer was going to cost more than expected spawned rumors that Sprint would either spin off its WiMAX plans or join forces with someone in a position to help in this case, Clearwire, which is the only other major holder of 2.5GHz spectrum in the country. The arrangement is expected to enable each company to increase capital efficiency and reduce overall network development and operating costs.
Clearwire has been snapping up swaths of the spectrum including spectrum that AT&T was required to spin off as a condition of its merger with BellSouth Corp. for the past several months. A fixed WiMAX provider specializing in portable DSL or cable modem replacement service, the company has been mum until now about its plans to migrate to mobile WiMAX. Now, it has Sprint as a partner to ease the risk in transitioning to what will be a very different model of service, reliant on bringing innovative data applications to handsets and devices, and allowing mobile access to an open, walled garden-less Internet.
As part of the deal, Clearwire will also be able to access Sprints 3G services, although no details have been released as to service bundle plans. For its part, Sprint plans to provide dual-mode CDMA-WiMAX services nationwide over its and Clearwires portions of the WiMAX networks.
Both companies expect to launch commercial service in the first half of 2008.
The companies individually are working with a broad range of manufacturers including Intel, Motorola, Samsung, Nokia and others to create an ecosystem of chips, products and software designed to provide mobile WiMAX access.
The services will be targeted to residential, business and municipal/government customers. The idea, Clearwire CEO Ben Wolff said, is to provide a common end-user experience regardless of whether that user is procuring service from Clearwire or Sprint. Further details on the branding will be released in August.
Clearwire will be able to market its services through the 500-plus Sprint retail stores and via its existing channels. Sprint will take the lead in establishing relationships with national distributors and other potential strategic partners, including wholesale or MVNO arrangements.
From a network perspective, the two providers will join forces to bring a deeper footprint than either would be able to achieve on its own, which will include urban, suburban and rural markets. To that end, Sprint and Clearwire will exchange some spectrum holdings to optimize build-out, development and operation of the network. Its not expected that any cash transactions will accompany that swap, Sprint CEO Gary Forsee said.
Sprint will build out about 65 percent of the network, reaching 185 million people, including 75 percent of the people located in the 50 largest markets. Clearwire will take on 35 percent of the network build out, covering about 115 million people. Seamless roaming will be enabled between the deployed areas. Also, Sprint will make its towers, backhaul and long-distance facilities available to Clearwire on commercial terms, Forsee said.
Network coverage should reach about 100 million people by the end of 2008.
The agreement is expected to be finalized within the next 60 days. It is also subject to review by the Department of Justice and approval of spectrum license assignments and transfers by the Federal Communications Commission. The initial term of the arrangement is 20 years, with three 10-year renewal periods.
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