Challenges for the New Clearwire

Implications: I am a supporter of WiMAX.  I applaud the joint venture between Sprint, Ckleariwire, Comcast, Time Warner, Google, and Intel. However, bringing together 6 very distinct businesses with distinct goals is going to be a very complicated task.

Analysis: A joint venture (JV) between Sprint, Clearwire, Comcast, Time Warner, Google, and Intel just saved WiMAX from being another wireless technology that could have been a contender.

The JV is great for McCaw’s guys in the old Clearwire.  I am wondering what will become of Xohm and the Sprint middle management teams and talent in Xohm.  The physical impact on Sprint’s Xohm network will be minimal.  Sprint’s CTO (Barry West) has not been able to get the network off the ground; it is not his fault.  Clearwire’s board has such luminaries like Nick Kauser.  Kauser is a legend in the cellular industry.  John Stanton of Trilogy Equity Partners will be investing directly in the new Clearwire’s common stock.  Stanton is another legend in the business.  Hesse and McCaw (especially McCaw) can also be considered in the same class of legends – look back on their careers; they helped build the wireless industry we have today.  The new Clearwire has a lot going for it in terms of wireless talent.  The question now is how are the non-wireless guys going to fit in terms of owner input?  Board of Directors presence is one thing but actually providing input is another.

At this time we know that the company has the following strengths:   

    -    Time-to-market advantage over competitors in fourth-generation services.  A two year head start.
    -    Existing strong spectrum holdings and a national footprint
    -    Existing wireless customers bases.  Clearwire's has small subscriber base of nearly 400,000 wireless broadband customers.  Sprint has its small and barely functioning XOHM WiMAX network.  Sprint also had an existing customer base of about 54 Million at the end of 2007; assume the number is closer 50 Million now – still a substantial number of customers.

The top two executive spots of the new Clearwire have been filled.  Ben Wolff, currently CEO of the old Clearwire will be the CEO of the new Clearwire.  Barry West, currently Sprint’s CTO and Xohm’s business unit leader, will be the new Clearwire’s president.  The talent pool be drawn from Sprint and the old Clearwire.  Investors need to watch carefully who is selected.  The new Clearwire will need the best technologists to make this new network work.

A telling point, the new Clearwire will be headquartered in Kirkland, WA.  Kirkland has been the home base for McCaw as far back as when he owned McCaw Cellular and when he took over AT&T Wireless.  Herndon, VA will supposedly have a significant roll in R&D.  Frankly I don’t believe that Herndon will play a lasting role because Hesse was ready to shut that place down.  Besides, carriers hate spending money on real R&D; they usually have what are strategic technology planning groups that focus on applications development.  I thought Sprint had a major lab facility in Kansas.  Why bother with Herndon?

The board has been organized.  Basic rules of structure have been put in place.  What is important to note is that what has been done so far is a huge accomplishment.  I still have questions but for now some of the big questions have been answered.

Keep in mind we are not in a restructuring.  The new Clearwire is a new company.  Sprint is still being restructured.  Sprint has to figure out how to integrate this new wireless venture into its existing wireless network without compromising.  What has to take place with all of the JV’s partners is integrating the new Clearwire’s network into their networks and service portfolios.  Intel will likely be providing technolgoy and products.  So I guess Intel now has an exclsuive deal with the new Clearwire.  Intel investors should be happy.  This is a huge undertaking; a huge integration effort.

The new Clearwire has the benefit of a several major telecom and media industry leaders to build this new company.  Let us hope the egos will be put aside for the sake of the shareholders.  For the investors I say watch what goes on carefully.

One more thing I guess this means the end of iDEN for Sprint.  My suggestion to Sprint is: Either sell Nextel’s network to Cyren Call or sell it to Frontline Wireless.