So Comcast (NSDQ: CMCSA) and Time Warner (NYSE: TWX) are moving on to the next thing after their stalled efforts with Pivot through Sprint: now the two cable companies are in talks with Sprint (NYSE: S) and Clearwire (NSDQ: CLWR) to create a separate company to roll out the high-speed nationwide wireless network using WiMax, reports WSJ, citing sources.
Sprint and Clearwire have had a now-on, now-off, and on-again relationship on a WiMax rollout and are now trying to raise at least $3 billion for a JV. Under the plan under review, Comcast would put as much as $1 billion into the venture, with No. 2 operator Time Warner Cable (NYSE: TWC) adding $500 million. The sixth-biggest cable operator, Bright House Networks, would contribute between $100 million and $200 million. And sure, why not throw in Google (NSDQ: GOOG) for good measure: it could provide hundreds of millions of dollars, the story says. Intel (NSDQ: INTC) has signaled willingness to put in about $1 billion or more. It is still early on the exact amounts each would control, and could change.
Not clear yet: what services would the cable ops offer through the WiMax network, but the story says that in exchange for funding the WiMax JV, the cable companies would get equity in the business and would be able to purchase wholesale access to the network to offer their own high-speed wireless data and voice services to customers.
New Sprint CEO Dan Hesse is pressing for all parties to come to an agreement prior to next week's CTIA show in Vegas.
Tricia adds: WiMax has been considered a good fit for cable and satellite companies for some time. They have good TV networks, and cable even has solid broadband offerings, but no wireless options. WiMax would provide interactivity for cable operators and the ability for consumers to watch TV and connect to the Internet while on the go. For the cable operators, this is very much a defensive play. Verizon (NYSE: VZ) has been entering the TV market with FiOS, its fiber optic service, and already has wireless services. Clearwire and Sprint Nextel have been pushing for broadband replacement that users can use everywhere, not just at home, where the cable companies are limited to today.
It will also be interesting to see what Clearwire does with its reseller partnerships with the Dish Network and DirecTV (NYSE: DTV). In Clearwire's last conference call, there were hints that the partnership wasn't going as smoothly as hoped. Perhaps, it's on the backburner as Clearwire negotiates a competitive deal. The Dish Network also paid about $712 million in the most recent auction spectrum that could feasibly deliver mobile TV almost nationwide. To be sure, Sprint Nextel and Clearwire know that in order to be competitive with other wireless operators going forward, they will need a lot of allies and cash a deal like this would put to rest the questions about whether they can effectively compete.
By Rafat Ali