Sprint S and Clearwire CLWR are forming a new company to build a nationwide "WiMax" wireless network, with the goal of offering advanced wireless Internet services to millions beginning next year, the companies said Wednesday.
Google GOOG, Intel INTC, Comcast CMCSA and Time Warner TWX are major investors. Under terms of the $3.2 billion collaboration, Sprint and Clearwire will form a separate, publicly traded company — called Clearwire — to oversee the nationwide buildout.
WiMax is akin to Wi-Fi in that it offers speedy surfing. But WiMax covers a much larger area. Sprint and its partners plan to blanket the USA with WiMax, turning the core of North America into one, big hot spot.
WiMax is one of several technologies vying to be the next way to connect to the Internet on the go. A WiMax transmitter, typically located on a cellphone tower, can provide a relatively fast Internet connection over more than a square mile.
Sprint and Clearwire will contribute WiMax spectrum, the others cash. Comcast will contribute $1.05 billion; Intel, $1 billion; Time Warner Cable, $550 million; Google, $500 million. Two other investors, Bright House Networks and Trilogy Equity Partners, will contribute $100 million and $10 million, respectively, people with direct knowledge of the situation said.
The advent of a nationwide WiMax network is sure to rattle the status quo in the U.S. wireless industry, now dominated by AT&T and Verizon Wireless. According to people with direct knowledge of the plans, "open access" — meaning you can use any compatible device — will be a bedrock of the new network. Likewise, all Web applications — from e-mail to video streaming and gaming — also will be supported.
As envisioned by the companies, WiMax construction will be fast. By 2010, the group hopes to have WiMax services available to about half the U.S. population.
For Sprint, which has struggled with customer losses, the deal underscores its commitment to WiMax. CEO Dan Hesse spearheaded the effort for this industrywide collaboration.
WiMax raises the game of Comcast and Time Warner Cable. Neither has had a credible wireless strategy. Under the terms of the deal, they will buy WiMax services wholesale from Sprint.
Intel, the No. 1 chipmaker, is a big backer of WiMax. It previously invested $600 million in Clearwire. Google is pushing hard into wireless via its new wireless operating system, Android.
Contributing: Michelle Kessler in San Francisco