Sprint, Clearwire Combine on WiMAX, and Hope ReturnsSprint, Clearwire Combine on WiMAX, and Hope Returns

The never-ending saga that is WiMAX has thrown us yet another surprise.This morning's papers bring news that Sprint and Clearwire will be combining (or "re-combining") their WiMAX offerings still using the name Xohm. The combined company will take Clearwire's name , though it will be headed up by Sprint's CTO and long-time WiMAX booster, Barry West. More importantly, Comcast, Intel, Time Warner Cable, Google, Bright House Networks, and Trilogy Equity Partners will jointly invest $3.2 billion in the new venture. The investments still falls far short of what will be needed to deploy ubiquitous nationwide coverage, and the target deployment date for the first major rollout has slipped from 2008 to 2010.

The never-ending saga that is WiMAX has thrown us yet another surprise.This morning's papers bring news that Sprint and Clearwire will be combining (or "re-combining") their WiMAX offerings still using the name Xohm. The combined company will take Clearwire's name , though it will be headed up by Sprint's CTO and long-time WiMAX booster, Barry West. More importantly, Comcast, Intel, Time Warner Cable, Google, Bright House Networks, and Trilogy Equity Partners will jointly invest $3.2 billion in the new venture. The investments still falls far short of what will be needed to deploy ubiquitous nationwide coverage, and the target deployment date for the first major rollout has slipped from 2008 to 2010.The way the deal is described, Sprint will own 51% of the new company, Clearwire shareholders will have 27%, and as a group the investorswill control 22%. Cable operators Comcast and Time Warner will invest $1.05 billion and $550 million respectively, and smaller operator Bright House Networks will add $100 million. The cable companies will wholesale Sprint's cellular voice service as well as WiMAX. Intel will add $1 billion on top of the $660 million they put into Clearwire in 2006; they're still promising to incorporate WiMAX capability in their next generation chipsets so maybe now they'll actually do it. Google came up with a rather meager $500 million and plans to integrate Google Maps, Gmail and other Android-based capabilities on the new WiMAX devices. In a separate transaction, Trilogy Equity Partners will kick in $10 million 90 days after the deal closes.The sale is expected to close in the fourth quarter this year, and the investments are based on a target price of $20 per share for Clearwire; the total value should be around $14.5 billion.

The new company is now committing to deploy Mobile WiMAX service to cover between 120 million to 140 million potential customers, roughly the same joint commitment Sprint and Clearwire made in their short-lived joint marketing agreement last year. The difference is that now the target date for that deployment has slipped from 2008 to 2010.

While the deal revives hopes for an alternative wide area wireless service, the fundamental problems with WiMAX remain. The planned footprint will leave the vast majority of the area of the US without WiMAX service,so the providers will have to incorporate Sprint's lower-capacity 3G cellular data service (EV-DO) in their WiMAX devices to accommodate roaming. Pushing out the availability date simply will allow the other cellular carriers, who already have moderately high-speed 3G data services, to gain more experience with their 4G LTE option. LTE uses technology similar to WiMAX and should provide similar services and data rates. Finally, both the WiMAX and the cellular operators are making big investments in their networks and backhaul infrastructure to deliver the next-generation offerings, but sales of their existing 3G data services have been less than stellar. You don't need megabit data rates to support text messaging and Blackberries-which is what sells in mobile data today.

Sprint-Clearwire might consider renaming Xohm "Lazarus," as it has come back from the dead at least temporarily. Adding a new competitive element to the wide area wireless data services mix will be a good thing. Competition spells new ideas, increased market interest, and most importantly, lower prices. They've bought their ticket to the dance, now let's see if they can shake their booty.