Sprint (NYSE: S) is planning to build its next-generation wireless broadband platform based on WiMax technology, a sort of "WiFi on steroids," which can cover many miles from one base station. To save costs, it was going to create a network to reach over 100 million people in the US by sharing costs with WiMax start-up Clearwire (NASDAQ: CLWR). Sprint is about to walk away from that deal [subscription required], leaving the future of WiMax in the US in question.
Sprint had said it would devote $5 billion to creating its WiMax network. Clearwire was projected to spend nearly as much, although it has not given out a firm number. Without adequate cash on hand, the smaller company was probably going to have to go into the debt markets to build its war chest. That would almost certainly have hurt the company's shares. Splitting the cost load with Sprint seemed like an ideal solution.
According to The Wall Street Journal "any slowdown in the rollout of WiMax by either Clearwire or Sprint would negatively affect companies that are backing the technology" such as Intel (NASDAQ: INTC) and Motorola (NYSE: MOT). The paper adds "some of those companies may try to inject financing into Clearwire to help keep its WiMax project on track, people familiar with the matter said."
WiMax was to challenge the big 3G networks of AT&T (NYSE: T) and Verizon Wireless and help resurrect a troubled Sprint. All of that appears to be in jeopardy now, as are the prospects of WiMax in the US.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
11-22-2007 @ 3:40PM
mikjsemaj said...
WiMAX stands in part for "microwave access". Has anyone done an environmental analysis of WiMAX and its potential impact on global warming / climate change?