Spinoff Gives Sprint, WiMAX a Second Wind

Talk about a win-win. Or rather, a win-win-win. This week Sprint-Nextel Corp. got rid of a giant albatross that had been hanging around its neck, while WiMAX got the shot in the arm it needed. And Clearwire Corp. has found a way to prevent its business model from becoming obsolete.

By selling its “Xohm” WiMAX business unit to Clearwire in return for a 51 percent ownership stake, the financially struggling Sprint now is relieved from the burden of building out and operating another nationwide network. As Sprint CEO Dan Hesse said: “The economics of this deal are very, very favorable. It allows us to bring 4G products to market without the capex required if we did it on our own.”

More importantly in the long run, WiMAX (and by extension Clearwire) wins, too. Pre-Xohm Clearwire, which has deployed DSL-replacement fixed WiMAX service in several markets, has a mobile WiMAX trial running in Portland, Ore. But it lacks the spectrum coverage, finances, business arrangements and R&D expertise to get mobile WiMAX deployed nationally with deep coverage on its own, leaving it stuck in the fixed-line-replacement, apples-for-apples business.

Meanwhile, after a previous arrangement with Sprint fell through due to the nebulously described “complexities” of the deal, and with Sprint’s own plans in question amid executive chaos and poor earnings reports, WiMAX’s future in the States looked uncertain. But the “new Clearwire,” a $14.5 billion company, will have all of Sprint’s $7.4 billion in WiMAX assets — physical, intellectual and spectral — and a sole dedication to bringing WiMAX to market, with no competing lines of business to siphon off resources. It also holds 40 billion MHz of PoPs, the deepest spectrum position of any company in the country. And that means WiMAX has a fighting chance of happening, said ABI Research analyst Phil Solis.

"This mobile WiMAX network will still maintain its time-to-market advantage, even with Verizon Wireless' aggressive LTE plans nipping at its heels," he said.