Sprint, Clearwire Nix WiMAX Deal

Sprint Nextel and Clearwire Corp. have pulled the plug on their plans to build a combined WiMAX network that would reach 100 million people next year. Both plan to stay in the market, however.

No. 3 cellco Sprint said it is still committed to developing WiMAX, but that it is reviewing its WiMAX business plans and outlook, with more details expected early next year. For its part, Clearwire CEO Ben Wolff said in a conference call that Clearwire would be delaying its plans to develop some markets into 2009, but that it would continue to expand.

The two companies said they simply “could not resolve complexities” in reaching final agreement on the terms of the transaction. They will however still work together on roaming, frequency interference coordination, spectrum exchanges, technology evolution and development and network standards.

"We are on track for soft launch late this year in the Chicago and Baltimore/Washington markets and commercial launch in 2008," said Keith Cowan, Sprint's president of strategic planning and corporate initiatives. "In line with Sprint's mandate of improving the customers experience and simplifying our operations, we look forward to working with Clearwire on opportunities such as roaming and standards."

Clearwire and Sprint own the lion’s share of the 2.5GHz band spectrum in the United States, and their statement of intent last July to work together on a joint WiMAX network seemed to benefit both. In the wake of WiMAX booster and Sprint CEO Gary Forsee’s departure from the company, Sprint’s WiMAX plans have been called into question as potentially being imprudent, as they would cost the company $5 billion with returns not expected until 2010, at a time when it is posting continued losses of subscribers and profit. Most recently, Sprint posted a staggering 77 percent profit loss in the third quarter.

For Clearwire, the loss of the Sprint deal means a longer row to hoe in order to achieve a meaningful, nationwide mobile WiMAX footprint, as well as a loss of critical R&D and marketing support to create and capitalize on new services. Clearwire’s shares tumbled on the news, down as much as 28 percent.

Clearwire Corp. www.clearwire.com

Sprint Nextel www.sprint.com