Can the Clearwire coalition save WiMax?

Can the Clearwire coalition save WiMax?

Hopes for nationwide WiMAX network hinge on alliance of telecom, cable and tech companies

For the past year, WiMAX has been a technology under siege.

It has faced criticism as an unreliable and untested technology, and not only from promoters of the rival High-Speed Packet Access (HSPA) and Long-Term Evolution (LTE) technologies.

Earlier this year, Garth Freeman, the CEO of Australian WiMAX operator Buzz Broadband, described his experience with the technology as a "disaster" and cited problems such as latency, jitter and poor indoor service. While WiMAX equipment vendor Airspan claimed that Buzz Broadband's poor WiMAX experience was due more to the company cutting corners in its deployment than to the technology itself, Freeman's anti-WiMAX tirade generated unwelcome negative publicity at a time when the technology experienced delays in some of its key deployments.

Additionally, the recent corporate upheaval at Sprint Nextel, which has been WiMAX's chief booster among US carriers, has also added to the uncertainty surrounding WiMAX in the United States. In particular, the company's commitment to the technology was questioned after former CEO Gary Forsee, who was instrumental in the company's decision to invest in WiMAX, stepped down in October. Months later, interim Sprint CEO Paul Saleh suggested that the company could spin off its WiMAX division to concentrate more fully on customer service and on improving its basic wireless offerings. And at around the same time, Sprint announced it had terminated its original letter of intent to build out a nationwide WiMAX network with Clearwire.

These persistent questions about WiMAX led Sprint's Xohm CTO Barry West to hit back at WiMAX skeptics at a Wireless Communications Association conference last month. Noting that it would be at least two years before LTE services and devices hit the wireless market, West accused LTE-adopting companies of "not having anything to offer" and of "trashing the system that's out there working."

But WiMAX received a big boost this week when Sprint and Clearwire announced that they will be combining their WiMAX businesses to create a US$14.5 billion mobile broadband company. As has been rumored for the past few months, the new company will be focused primarily on deploying a nationwide WiMAX network that will provide 4G coverage to consumers, businesses and even government public safety services in urban and rural markets.

And that's not all: The new company, which will be known as Clearwire, has already secured US$3.2 billion in total investments from several major tech and communications companies, including Google, Intel, Comcast, Time-Warner Cable and Bright House Networks. Under the strategic investment agreement signed by the companies, Sprint will own the largest stake in the new company at 51 per cent, Clearwire will own about 27 per cent of the company, and the group of five major investors will own 22 per cent.

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