WiMax has the potential to substantially raise the game of the U.S. wireless industry — and the USA by extension, says Sprint Nextel CEO Dan Hesse.
"It gives the United States an opportunity to be a leader in wireless broadband," Hesse says.
Sprint s and Clearwire clwr on Wednesday formally announced that they are forming a new publicly traded company — to be called Clearwire — with the goal of building a WiMax network across the USA.
WiMax is akin to Wi-Fi in that it offers speedy, wireless Web surfing. But WiMax covers a much larger area. Sprint and Clearwire plan to blanket the USA with WiMax, turning the nation into one big hot spot.
Google goog, Intel intc, Comcast cmcsa and Time Warner Cable twx are big investors in the new company, which will adopt Clearwire's name and stock-trading symbol. Clearwire was founded in 2003 by wireless pioneer Craig McCaw, who will become non-executive chairman.
Hesse says the "unique mix of names" makes this wireless company different from any other: "Be it a brand, customer relationships, distribution or applications — all of these (investors) bring resources to the table on top of money, and that's what makes this different."
Google is investing $500 million; Intel, $1 billion. Comcast is investing $1.05 billion; Time Warner Cable, $550 million. Bright House Networks and Trilogy Equity Partners, headed by wireless pioneer John Stanton, are contributing $100 million and $10 million, respectively.
The deal is expected to close in the fourth quarter, subject to approval by Clearwire shareholders and regulators. The WiMax network is expected to reach about half the U.S. population by the end of 2010.
Sprint will own about 51% of the new company. Existing Clearwire shareholders will own about 27%.
Sprint has tried to partner with cable TV operators before and failed. Hesse says this is different.
"This is not a partnership," he says. "It's a stand-alone public company with a focus on its own customers."
Hesse figures the new Clearwire will have a two-year jump on competitors Verizon and AT&T, which won't start rolling out superfast mobile Web offerings for another two years or so.
WiMax will offer download speeds almost three times faster than current average mobile download speeds.
Hesse thinks that will seal the deal for a lot of customers.
Once the network is up and running, "We'll be the undisputed leader in wireless data," he predicts.
Lowell McAdam, CEO of Verizon Wireless, vz says Sprint's WiMax plan has lots of potential pitfalls. "Anytime you try to build out a nationwide network, it takes a lot of engineering," money and operational oversight, he says.
Brian Roberts, the CEO of Comcast, says consumers are the biggest winners. Thanks to the WiMax deal, "our customers will have the best products wherever they want them, with the fastest wireless (broadband) network" in existence.
Comcast also gets something that's arguably just as important: peace of mind.
Under the terms of its agreement, Comcast has "founder's status," Roberts notes.
That means "we can use the network 'forever,' " he says. "Having forever-access to this spectrum is a great opportunity for us."