The always-interesting mobile wireless broadband space continues to intrigue. This week’s announcement that the two biggest WiMAX players, Sprint Nextel and Clearwire, were getting together to build a nationwide WiMAX network, while hardly surprising, did open up a plethora of questions for the cable industry.
For instance, what’s this mean for the cable JV? The partners – Comcast, Cox, Time Warner Cable, Advance Newhouse and Sprint Nextel – have always maintained that nothing will change just because Sprint’s moving onto WiMAX, which it – to the dismay of some other wireless players – calls 4G. The JV’s primarily interested in 3G (third generation mobile) and how it can mix and match cable broadband content with semi-broadband wireless. That party line was reiterated by a Sprint Nextel spokesman after a conference call with Sprint Nextel and Clearwire pooh-bahs Thursday morning.
"When we reached the deal with them on Pivot, we included in the agreement a path for them, which Gary described this morning. At some point, when we developed the WiMAX network and they wanted to have access to WiMAX as a part of their deal, there’s a path in the agreement for them to do that, either through reaching a level of sales of Pivot or negotiating financial terms as Gary described this morning, so nothing has changed about that," the Sprint Nextel spokesman said. "Any other deal with cable or satellite or any other national partner through this arrangement with Clearwire, if we want to reach any other kind of deal, the two companies have agreed that Sprint will take the lead on outreaching to those deals, whatever it would be."
The Gary to whom the spokesman referred is Gary Forsee, chairman-CEO of Sprint Nextel, who delivered quite a laundry list of items that the deal with Clearwire will contain, not the least of which is a deal Clearwire reached with DirecTV and DISH Networks to distribute its wireless WiMAX services to their satellite customers. Ch, ch, ch, changes That satellite deal will stay in place; the cable JV may change, Forsee said: "Based on numbers of 3G or voice and data customers on the current agreement, a path would allow them to reach a threshold of certain customers being sold having access then on those same terms to the 4G or WiMAX network as it’s deployed. That provision stays in place," he said, making it perfectly clear, we’re sure, to any law student. "In addition to that, there was language that suggested beyond that if there was a desire to change economics of that prospect away from an agent distribution relationship into something that would look more like a wholesale or owner’s economics, those discussions would occur, and terms would be dealt with separately."
The clarity of that language was especially appreciated, no doubt, by the members of the Sprint Nextel and Clearwire legal teams.
Clearwire, Forsee continued, "has been very supportive of the breadth and scope that Sprint Nextel provides today with the cable companies and certainly would consider WiMAX as a complementary offering should the cable industry decide to go down that path."
Perhaps Clearwire doesn’t speak as clearly because Ben Wolff, Clearwire’s CEO, previously described his vision thusly: "By working together, a nationwide network becomes possible – a unified network that is capable of competing with both wireline and wireless services, thereby enhancing services for consumers and increasing competition."
Hmmmm. The details Anyway, on a more esoteric level, the two providers plan to swap some 2.5 GHz spectrum; develop 100 million points of presence by 2008 and eventually share 300 million POPs on a Sprint Nextel-heavy 185-115 million basis; and go forth with – and again, perhaps cable should be paying attention here – the development of dual-mode 3G/4G devices.
"We really want this experience for 4G services to be seamless to customers. That obviously sets up how we interact with 3G services and how we, in this case, enable Clearwire for 3G voice services as well as take advantage of Clearwire’s buildout of the 4G network to serve our existing voice and data customers," said Forsee. "The agreement started to come together when we recognized the importance of providing a common experience for customers wherever they are around the country."
That is, they want a common 3G/4G experience that gives Clearwire access to about 500 Sprint Nextel retail outlets and includes what Barry West, CTO and president of Sprint’s 4G Mobile Broadband business unit, described as dual-mode devices, including Samsung-built air cards that are 1xEVDO and WiMAX capable and will be "available around launch time as well."
"We are both ordering 802.16e equipment with the requirement for full interoperability. We already have a requirement in our agreement that all of our vendors must fully interoperate at the base station level. It’s also a full IP architecture, so we are implementing the Internet Protocol across both networks. We should be able to full hand off regardless of whether this is a Clearwire territory or this is a Sprint Nextel territory," West said. POP goes the nation In other words, the two companies, pending final internal and government approvals, are building a new nationwide broadband network that doesn’t depend on wires for any last-mile delivery.
"We believe ultimately that this is potentially complementary, if we have a robust nationwide WiMAX network that this is potentially complementary to cable," the Sprint spokesman spun away. "Sprint’s current agreement with cable does not change, and, as Gary said this morning, Clearwire recognizes our strong relationship with cable and supports that. Ultimately, we’ll see what happens, but we do believe that this presents us with the potential for being complementary to cable."
Especially, one might add, in the Baltimore, Washington DC, and Chicago areas where Sprint will roll out what we’re sure will be complementary service next April. – Jim Barthold