Sprint Hopes Clearwire Deal Will Save WiMax

"For Sprint shareholders, this is an opportunity to unlock and bring visibility to the value of our significant spectrum assets, technology and expertise, by leveraging the technology, applications and distribution strength of our investors, who together command nearly a half-trillion dollars in market capitalization," said Sprint president and CEO Dan Hesse. "We've made an excellent start developing XOHM WiMax services. Contributing those advances to a strongly backed new company -- in which we'll hold the largest interest -- provides Sprint with additional financial flexibility and allows Sprint management to leverage and focus on our core business."

Hesse added that, "Additionally, the agreements allowing the new company and our cable company investors to bundle and resell Sprint's third-generation wireless services strengthen the distribution of our current services while reducing the complexity and enhancing Sprint's cable relationships."

The others involved -- Comcast, Time Warner Cable, Intel, Google and Bright House, a cable operator -- will get a combined 22 percent stake and are expected to pitch in $3.2 billion to fund the massive project.

The remaining 27 percent will belong to Clearwire shareholders.

Despite the big dollars behind the project, analysts wondered whether it would actually pan out and if too many cooks would spoil the WiMax broth.

"We believe the anti-Verizon and AT&T crowd has been galvanized to fight their dominance in the wireless industry," Bear Stearns analyst Phil Cusick wrote in a research note. According to Reuters, Cusick added that the structure of the consortium "could leave the insurgents slow to maneuver and open to poor execution."

The newly-formed company is hoping to deploy a network that covers between 120 and 140 million people by 2010 and, if funding pans out, could expand that to 200 million after that.

The massive partnership could help Sprint and Clearwire beat the clock and get a solid head start on AT&T and Verizon, the company's chief rivals that are expected to start selling similar offerings in around 2010. Both AT&T and Verizon have been working diligently to unseat leading cable companies and Sprint by offering bundled quadruple play packages that tie together television, Internet, telephone and wireless services.

The deal will likely close in the fourth quarter this year.

Along with the large investments from Sprint and participating companies, wireless veteran John Stanton offered up $10 million in funding from his Trilogy Equity Partners. Google is also stepping up, hoping the venture will help push its Android operating system for mobile phones. Google is also expected to be the search provider for WiMax services.

As for Intel, the chip-maker will work with manufacturers to embed WiMax chips into its Centrino 2 processor for laptops and other mobile Internet devices. Intel will market the new company's services in association with its own brand.