Maybe WiMAX Is Not Dead

I've written here frequently about WiMAX - a couple of weeks ago I even asked if it was dead! However, I have not forgotten about the efforts of Clearwire and Sprint NexTel to build out a national WiMAX network. Yesterday, Clearwire told Unstrung the company is expecting to close the deal, securing a $3.2 billion Sprint Nextel investment ((with $3 billion from Intel, Google, Comcast and Time Warner). The deal has met resistance from AT&T with the company complaining to the FCC about the combined spectrum that would be held by the the two companies.

Clearwire is currently running a "pre-WiMAX" fixed wireless network using proprietary technology from NextNet. The company has plans to go live with its first WiMAX (802.16e) service in Portland, Oregon in the fourth quarter of this year and follow that with Atlanta, Grand Rapids, and Las Vegas. Unstrung quotes a Clearwire spokeswoman:

While we are in a great position to launch mobile WiMAX in our Portland market by the end of the year, the timing of the commercial launch is based on a timely close of the Sprint transaction and whether we choose to secure additional financing in the interim.

I can see a place for WiMAX in rural areas - parts of Maine, New Hampshire and Vermont could certainly benefit. Earlier this year I heard rumors (just rumors!) Fairpoint Communications was considering building their own WiMAX network after the Verizon territory purchase. I certainly scratched my head doubting Fairpoint would consider the cost of building something like that on their own. Now..... a Fairpoint partnership with Clearwire / Sprint Nextel building out rural areas with WiMAX...... that could be very interesting.

My Thoughts on the Verizon Wireless / Alltel Deal

Over the past couple of days I received some email asking for my thoughts on the Verizon Wireless / Alltel deal. At the time the Verizon Wireless purchase of Alltel had not been agreed to by the companies - it was "under discussion". Well.... late yesterday the two companies agreed. Here's some details on the deal from an Alltel press release and Alltel's Wikipedia entry:

- Alltel is the fifth largest wireless carrier in the United States.

- Alltel serves more than 13 million customers in markets in 34 states. This is the largest wireless coverage area in the United States and includes 57 primarily rural markets that Verizon Wireless does not serve.

- Alltel focuses on small to medium size cities but provides wireless services to residential and business customers in all 50 states through low-cost roaming agreements with the major national CDMA carriers including Verizon Wireless and Sprint Nextel. These agreements give Alltel customers access to nationwide service while providing those carriers coverage in rural areas.

- Verizon Wireless currently serves approximately 67.2 million customers. The deal will bump Verizon's customer numbers to over 80 million, placing Verizon ahead of AT&T in the number of wireless customers served.

- The deal is valued at $28.1 billion. Verizon Wireless will acquire Alltel's equity for $5.9 billion and assume Alltel's outstanding $22.2 billion in debt.

When compared to the big companies Alltel, with its 13 million customers, is a small player. Being small has provided some advantages though. Here's an interesting quote from a Washington Post piece titled Is Verizon Wireless Buying Alltel For Its Assets Or For Its Culture Of Innovation?:

[being relatively small] gives the company a level of comfort and flexibility to quickly roll out new services without the constraints larger carriers face. It doesn't worry that millions of users will start using a new service overnight that crash the network, and it doesn't have to train as many customer service and retail representatives every time it launches a new phone or application. So, the concern is that once a part of Verizon this attitude will fade.

My thoughts:

Will Verizon Wireless maintain a level of separation and use Alltel as a wireless "skunk works"? I don't see how it can.

Are Sprint Nextel and T-Mobile next? I would not be surprised to see AT&T take a shot at one of them.

What do these kinds of mergers usually mean for consumers? Less competition and fewer choices commonly lead to higher prices.

The Verizon Wireless / Alltel deal still needs regulatory approval and is expected to be completed by the end of this year.

WiMax Sprint / Clearwire / Comcast / Time Warner Deal Announced

Earlier this week I wrote about it and yesterday Sprint Nextel and Clearwire Corporation announced the combination of wireless broadband divisions to form a single $14.5 billion company that will keep the name Clearwire. Also participating and throwing in a combined $3.2 billion are Intel, Google, Comcast, Time Warner Cable, Bright House Networks and Trilogy Equity Partners. Trilogy is run by John Stanton, a wireless veteran who made billions when he sold VoiceStream and Western Wireless.

Back in 2006, Mike Q and I did a podcast on WiMax, Clearwire and Clearwire's Founder Chairman Craig McCaw. Here's what we said about Clearwire back in September 2006:

Craig McCaw is a visionary, who has had an uncanny ability to predict the future of technology. WiMAX has the potential to do for broadband access what cell phones have done for telephony - replacing cable and DSL services, providing universal Internet access just about anywhere - especially for suburban and rural blackout areas.

Just like in the early 1980's Clearwire's Craig O. McCaw has been buying up licensed radio spectrum. You may not have heard of Craig but in the early 80's he recognized local cell permits being sold by the the FCC were greatly undervalued and he started bidding cellular phone licenses. He did his buying under the radar screen of the telcos and, by the time they recognized what he was doing it was basically too late - Craig had already purchased and owned licenses in most of the major markets.

Today - Clearwire, under Craig's direction, has quietly purchased enough licensed radio spectrum to build a national WiMAX network.

Craig McCaw and Clearwire have the spectrum, the money, the partners, superior wireless broadband technology when compared to services like 3G and the experience to make this work..... think about it..... Intel makes the WiMax radio components for computers, Google creates applications that can use WiMax services, Comcast, Time Warner and Brighthouse bundle WiMax products and services and market to their customers.... ..

According to an AP post yesterday:

The new company plans to make its service available to 120 million to 140 million people in the U.S. by the end of 2010, although company officials acknowledged they'll need to raise or borrow up to $2.3 billion more to make that happen. Alternatively, they said they could shrink the size of the network.

The deal has been approved by all companies but still must be approved by Clearwire shareholders and regulators. It is expected to close in the fourth quarter of this year.

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To read show notes and listen to Mike Q and my 17 minute and 20 second podcast (Sept 2006) titled WiMax - Why Not?, click here. Listen to it directly in your web browser by clicking here. If you have iTunes installed you can subscribe to our podcasts by clicking here.

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