Why the New Clearwire Makes Sense

Back in July 2007, Sprint announced deals with Google and Clearwire. At the time, I sang the praises of the two agreements. Today, the three companies, together with three cable providers and Intel, announced a much more far-reaching relationship.

The July Clearwire announcement was about network sharing. Sprint would build a 4th generation wireless WiMax network covering part of the country. Clearwire would build a WiMax network covering the rest of the country. And then each company’s customers could roam onto the other’s network when traveling. At the time, I called out the single most significant benefit of the arrangement as: “By splitting the country and agreeing who will build where, capital and time aren’t wasted building networks that compete with each other in popular geographies. The full capital plans of each company can be working together to accelerate and broaden availability faster and farther than either company could achieve on its own.”

Today’s announcement goes even further, merging the WiMax operations of Sprint with Clearwire to create a new independent company, under the Clearwire brand, but 51% owned by Sprint. The benefits I previously called out still hold true: more efficient capital spend, more efficient communication of the value proposition, and a stronger position with technology vendors.

However, the inclusion of the cable companies takes it another step further. As you may recall, a consortium called SpectrumCo, led by Comcast, acquired 137 licenses in the AWS auction back in 2006. Although these cable companies could credibly have built their own network, instead investing in the new Clearwire is a much better way to get what they want with the most efficient use of capital.

For Clearwire and Sprint, of course, the cable companies represent a tremendous sales channel. The wholesale agreements with the cable companies appear to be well suited to integration into convergence bundles that could help rapidly drive broad adoption of WiMax.

Comcast’s CEO, Brian Roberts said “This transaction is attractive to us strategically and financially and puts in place very attractive wholesale relationships for access to Sprint’s existing 3G and Clearwire’s 4G networks, giving us complete flexibility to introduce wireless mobility in terms of product innovation and deployment.”

Similarly, Glenn Britt, Time Warner Cable’s CEO said “”This exciting new venture enables Time Warner Cable to help shape the next generation of wireless services in ways that will complement and enhance our products and services.”

So, best of all worlds, we don’t have mad capital being thrown at building competing networks, instead we have tremendous marketing power being focused to drive utilization scale for an asset intensive business.

But what about Google?

Last July, I noted: “But Sprint’s commitment to open APIs for developers like Google to innovate on top of the Sprint (and Clearwire) networks is even better. We have a sense that increased availability (because products and services are fully useful wherever you go) and contextual relevance (because they will adapt to the context in which you’re using them – where, when, with whom, etc.) is what will drive new value in the Mobility Revolution. But, we can only guess at how that new value will actually be realized. Only by putting this power into the hands of innovators will the full potential of mobility be realized. … Sprint and Google both, in this announcement, are clearly signaling their commitment to enabling the kind of innovation that can truly revolutionize how we interact with the world, how we do our jobs, and how we run our businesses.”

Google seems to agree and has put a sizeable investment behind this belief. On the official Google blog, Larry Adler wrote: “We believe that the new network will provide wireless consumers with real choices for the software applications, content and handsets that they desire. Such freedom will mirror the openness principles underlying the Internet and enable users to get the most out of their wireless broadband experience. As we’ve supported open standards for spectrum and wireless handsets, we’re especially excited that Clearwire intends to build and maintain a network that will embrace important openness features. In particular, the network will: (1) expand advanced high speed wireless Internet access in the U.S., (2) allow consumers to utilize any lawful applications, content and devices without blocking, degrading or impairing Internet traffic and (3) engage in reasonable and competitively-neutral network management.”

The Clearwire deal is well aligned with complementary Sprint announcements over the past couple of days that also drive freedom for users and innovation by third parties.

Today, Google and Sprint also announced partnering on the 3G network that Sprint will continue to own and operate. Kevin Packingham, Sprint’s VP of Product Managment said “Our partnership with Google is a great example of how Sprint is making the mobile Internet experience even more customer-friendly and useful to our customers.” And Doug Garland, Google’s VP of Product Management noted “We both believe in openness and providing compelling, easy-to-use mobile services that consumers can use every day. We look forward to working together to deliver a great experience.”

Sprint also amplified that commitment to freedom (that’s freedom as in “free speech” not “free beer”) at the JavaOne conference this week. Sprint announced, among other things, a relaunch of the Professional Developers’ Program, providing APIs for developers to access GPS, address book, and messaging information.

Bottom line, what does it all mean?

I believe these announcements provide a much more rapid path to a broadband mobile (not just wireless) network that delivers multi-megabit speeds and the openness to innovation that will unleash unimaginable developments. But it also means marketing partners that share the vision and can drive this mobility revolution to the mass market.

And that really makes sense for driving the mobility revolution forward!

Now playing: Phil Keaggy – Water Day

One Response to “Why the New Clearwire Makes Sense”

  1. […] Earlier this year, Sprint announced a huge (and complex) deal to merge our Xohm WiMax business with Clearwire.  The new company would receive $3.2B in funding from strategic investors including Intel, Google, Comcast, Time Warner Cable, and Bright House Networks.  On Friday, the deal was completed.  The company has also announced that their Mobile WiMax services will be branded “Clear.”  Ben Wolff, Clearwire’s CEO said Clear “is a natural choice because it is a simple, commonly used word that has significance as it relates to communications services and, of course, it is part of our corporate name.” […]

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