Google, Cable in $12B WiMAX Deal?
Sprint, Comcast, Google, Time Warner and Intel will launch a Mobile WiMAX Joint Venture, says the Wall Street Journal. More from NY Times, GigaOm, ArsTechnica and Blogrunnner.
As early as Wednesday, an unlikely alliance of titans from the cable, Internet and chip industries will disclose they are investing $3.2 billion in a company that will deliver Web access for cellphones and laptops at speeds much faster than what is available today using a technology called WiMax.
Analysts say the venture, valued at more than $12 billion, will have a two year head-start on rivals Verizon Wireless and AT&T Inc., which are just beginning to sketch out plans for their next-generation wireless networks.
The deal gives the cable operators and Google prominent roles in shaping the future of mobile Internet access. The venture must still be approved by federal regulators.
The deal is most of all a coup for Sprint CEO Dan Hesse, who four months ago was charged with rescuing Sprint from near-disaster.
“It’s sort of like, ‘Dan, you haven’t vacuumed the bedroom,”‘ Mr. Hesse said. “Well, that’s because the house is on fire. I will get around to it later.”
Last January, Mr. Hesse called Comcast Chief Executive Brian L. Roberts to explore a deal. Mr. Roberts was receptive, partly because he thought the new Sprint CEO might be easier to work with, and partly because he was beginning to see WiMax as an opportunity to confront his own strategic dilemma.
In early February, Mr. Roberts took a trip out to Portland, Ore., to test Clearwire’s nascent WiMax service there and meet with Mr. McCaw. He came away impressed with the technology, say people familiar with the meeting.
Mr. Hesse leaned on Mr. Roberts to round up other cable operators, including Time Warner Cable and a regional provider, Bright House. The cable executives raised several concerns, people familiar with the meeting say. The most pressing issue: They wanted to make sure the new company would be able to use Sprint’s existing “third generation” broadband network until the WiMax network is nationwide, which could take a few years.
Reeling in Google proved especially difficult. Google CEO Eric Schmidt wouldn’t return Mr. Hesse’s phone calls. Mr. Roberts, who had developed a close relationship with the Google CEO, stepped in. He made a pitch on Mr. Hesse’s behalf, then connected the two via email to get a discussion going, according to people familiar with the matter. Mr. Hesse promised to make Google the preferred software developer on the WiMax network, meaning its search service would be the default on new mobile devices.
At times, the sessions got heated. At one meeting in the New York offices of law firm Kirkland & Ellis, Clearwire Chief Executive Ben Wolff was so frustrated with the lack of progress that he pulled his team from the room, shouting “That’s it, the deal’s off,” according to a person at the meeting.
By mid-March, the outlines of a deal were in place, though it would take two more months to iron out details. The new company secured $1.05 billion from Comcast, $1 billion from Intel, $500 million from Google, $550 million from Time Warner and $100 million from Bright House.
Sprint will hold a majority stake in the new venture. Mr. Hesse agreed to give up day-to-day control to Clearwire’s Mr. Wolff, who is slated to be CEO. Mr. McCaw is expected to be named chairman. The new company will take on Clearwire’s name.
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Not mentioned was the mobile tv component. Perhaps Craig McCaw’s ICO G-1 will be drafted for DVB-SH. When ICO’s mobile TV service goes live in 2009, it will focus on in-vehicle displays with larger screen resolution and 10 to 15 channels at 500 kb/s channel, plus two-way capabilities for vehicle navigation and emergency two-way calling and messaging.
But if Sprint spins off WiMAX, sells Nextel and DT buys Sprint, what would be left?
And you may ask yourself
Where does that highway go?
And you may ask yourself
Am I right?…Am I wrong?
Once in a lifetime/water flowing underground.
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