Report: Flagship WiMax project in trouble

Sprint Nextel and Clearwire ending agreement to jointly build a high-speed wireless network across the US

A flagship project to build a WiMax network in the United States is reportedly in peril.

According to The Wall Street Journal, mobile operators Sprint Nextel and Clearwire are scrapping their agreement to jointly build a nationwide high-speed wireless network based on WiMax technology.

The two operators had announced in July that they would work together in order to share costs, to provide network coverage to 100 million people by the end of 2008, and would jointly sell wireless broadband to businesses and consumers, as well as offer services to the US government and public safety agencies.

However, according to the Journal, which cited people familiar with the matter, the complexities of the transaction and the departure last month of Sprint chief executive Gary Forsee, has made it too difficult to reach a final agreement.

The details of this WiMax network had been expected to be finalized by mid-September, but doubts emerged last week when acting Sprint CEO Paul Saleh said that the two companies were still in discussions.

The recent departure of ex-Sprint CEO Gary Forsee has also prompted speculation that Sprint may scale back its own WiMax network, known as Xohm, as the operator struggles to cut spending and halt subscriber losses.

Sprint has pledged to spend US$5 billion on Xohm by 2010, but the markets are worried over the commercial viability of the WiMax network, despite its ability to offer faster wireless connection speeds over a greater distance compared to Wi-Fi. WiMax has also been officially accepted as a 3G standard, thus allowing operators to run WiMax in spectrum designed for 3G phone networks.

Clearwire had been hoping to use the Sprint deal to expand its geographical coverage of its network in the United States, and share the massive network build costs. And the news also will be of concern to chip giant Intel, the principal backer of WiMax, alongside the likes of Nokia, Motorola and Samsung Electronics.

Indeed, the Wall Street Journal has suggested (once again citing people familiar with the matter) that some of these companies could inject financing into Clearwire, to help keep its WiMax project on track.

Both Clearwire and Sprint are currently the only two US operators pursuing a WiMax rollout, as they both own complementary swathes of radio spectrum around the United States.

In the U.K., Pipex is planning a WiMax service with support from Intel.

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