Breakup lets Clearwire pursue other WiMax partners

But companies will continue informal discussions to advance high-speed wireless technology

After announcing that their formal WiMax partnership agreement was dissolved, both Sprint Nextel and Clearwire said separately that they will continue informal discussions with each other on ways to advance the high-speed wireless technology.

Still, the most significant impact of their plans to tear up a July letter of intent to deploy mobile WiMax together is that Clearwire now has the freedom to find other partners to help roll out the technology, said Berge Ayvazian, an analyst at Yankee Group Research in Boston.

Potential new partners with Clearwire could be satellite operators or even Google, which expressed interest in purchasing 700-MHz spectrum at a federal auction in January that could be used with WiMax, Ayvazian said. "Wireless broadband from Clearwire could run alongside of dish satellite technology and others," he said in an interview. Possible partners with Clearwire on WiMax could be "satellite operators, why not? Even Google, why not?"

Clearwire needed to dissolve the letter of intent because it bound Clearwire to work exclusively with Sprint, Ayvazian said. Clearwire CEO Ben Wolff discussed why the letter of intent was dissolved in a conference call on the company's favorable third-quarter results. "Wolff faced a lot of realities, including no CEO on the other side of the table," after Sprint CEO Gary Forsee resigned in October following a year of losing subscribers. "There was a lot of uncertainty on Sprint's side."

Analysts noted that there are many backers of WiMax, including those that Sprint still has lined up, such as Intel. The chip maker has said it is prepping chips for laptops and smaller devices that will run WiMax.

"If push comes to shove, Intel will force the issue," said Jack Gold, an analyst at J.Gold Associates. "They'll put more money into it."

A spokeswoman for another interested supplier of WiMax equipment, Motorola, said in an e-mail that despite the dissolution of the letter of intent, "Motorola sees no change in the pact of the buildout of the overall U.S. WiMax network." She said Motorola will continue to be a leading infrastructure vendor for Sprint's Xohm network and the only vendor working on Clearwire's portion of the U.S. WiMax network.

"Money is out there chasing WiMax and the question is how to channel that," Ayvazian added. Sprint was unable to move aggressively, and Clearwire need to move on. It is possible that Sprint, under a new CEO, could become an investor in the Xohm WiMax division it created, with Clearwire working with another entity as the main player, he said.

Wolff predicted that Clearwire would need until 2009, instead of 2008 as stated earlier, to bring WiMax capabilities to 45 million potential US customers. Clearwire is still planning to get the city of Portland running on WiMax in 2008, before it moves to other new markets in the US. It also plans to retrofit nearly 40 markets that are already equipped for pre-WiMax service, Clearwire executives said.

Sprint issued a statement saying it is on track for a soft launch of Xohm in Chicago and Baltimore/Washington later this year, and said it will make further comments on its WiMax business plans early next year.

While Wolff delivered a positive statement on its growth today, Sprint is struggling with problems in its core business, analysts said. "It's clear that Clearwire is still talking to Sprint, since the opportunity is still there,' Ayvazian said. "But Sprint needs Clearwire, absolutely."

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