Clearwire outsources network management to Ericsson

The seven-year plan will save Clearwire money and follows a similar deal with Sprint

Clearwire is outsourcing the management of its network to Ericsson for seven years in a bid to cut its operating costs.

Ericsson will manage both the wired and wireless parts of Clearwire's national network, hiring about 700 Clearwire employees who are familiar with the company's WiMax infrastructure. Clearwire said it will retain ownership of the network and responsibility for all technology and strategic decisions.

Clearwire has been gaining subscribers, especially through partners such as Sprint Nextel that resell its WiMax services, but the company is still posting losses and has had to take dramatic steps to cut costs. Without disclosing the savings the deal with Ericsson would produce, Clearwire said they would be significant. The 700 employees moving to Ericsson represent nearly all of Clearwire's network management organization, but there may be a small number of job reductions, Clearwire spokesman Jeremy Pemble said.

Ericsson manages networks for more than 100 carriers around the world, but this is its first contract to run a WiMax network. Because the contract spans seven years, Ericsson could end up managing LTE (Long-Term Evolution) infrastructure if Clearwire decides to deploy that technology in place of, or in addition to, the WiMax radio network. Clearwire has been testing LTE and expects to finish those trials around the middle of this year. Ericsson is a major supplier of LTE infrastructure to service providers including Clearwire rival Verizon Wireless.

Sprint Nextel, Clearwire's majority owner and the company's main partner in mobile WiMax, turned over management of its own network to Ericsson in 2009. Clearwire said it was influenced by Sprint's success with Ericsson but that the arrangements were separate. Sprint and Clearwire are the only U.S. carriers who use Ericsson's management services.

Ericsson has been providing managed services to carriers for about 15 years but began a major push into that business in 2004, said Ericsson spokeswoman Kathy Egan. Networks that it manages for carriers serve more than 800 million subscribers worldwide, and Ericsson provides full-time technical support to carriers serving more than 2 billion subscribers, the company said.

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