Clearwire, Sprint fight no more

Sprint (NYSE:S) and Clearwire (NASDAQ:CLWR) have kissed and made up, announcing today new wholesale agreements that commit Sprint to using Clearwire’s WiMAX network regardless of what other mobile broadband paths Sprint pursues—at least for the next two years.

Sprint is promising a minimum of $1 billion to Clearwire to use its network: $300 million for 2011 and $550 million for 2012 with an initial payment of $175 million up front. But more important to Sprint, it has renegotiated the terms of how it pays for mobile broadband access. The companies’ statement (Briefing Room: Sprint and Clearwire announce enhancements to their long-term wholesale agreement) didn’t give too many details about the new arrangement, but it appears Sprint will no longer have to pay a flat monthly fee for each WiMAX smartphone subscriber. That’s important because Sprint has a lot of EVO and Galaxy 4G customers that live nowhere near a Clearwire market and therefore rarely if ever access the WiMAX network. Rather payments from the new agreement appear to be driven by usage, though Sprint will still be expected to make a minimum payment for each 4G device. Finally Sprint and Clearwire said the new agreement allows for more flexibility in coming up with tailored broadband services for enterprise and government, targeting such applications as machine-to-machine (M2M) communications.

Clearwire doesn’t just get a much-needed pledge of revenue from the deal. It also has a definite wholesale agreement for Sprint’s 3G EV-DO and CDMA 1X voice networks, clearing the way for it to launch its long-promised smartphone services (CP: Clearwire to release 4G handsets).

“We are pleased to reach this wholesale pricing agreement with Clearwire,” Sprint CEO Dan Hesse said in a statement. “We look forward to working with them under this new agreement to provide an expanded offering of 4G capabilities and solutions for Sprint customers.”

Clearwire interim CEO John Stanton added his own statement: “Sprint has been our biggest and most important customer and partner since we launched 4G services in the U.S. more than two years ago. Today's agreement further aligns Sprint and Clearwire's interests and lays the foundation for a continued, constructive relationship. We are pleased to have the resources and partnerships necessary to maintain our 4G leadership and leverage our significant spectrum and capacity for delivering mobile broadband services.”

There was little chance Clearwire and Sprint wouldn’t have come to terms, given Sprint is Clearwire’s majority shareholder as well as primary customer. Still a specter still hovers over the relationships as reports continue to emerge about Sprint and LightSquared’s courtship. According to the Wall Street Journal, Sprint and LightSquared are close to finalizing a network sharing deal that would allow LightSquared to build its long-term evolution (LTE) on Sprint’s new modernized technology-agnostic base stations. Such a deal would allow LightSquared to deploy a network much cheaper than building one from scratch with Nokia Siemens Networks (NYSE:NOK, NYSE:SI) gear and give Sprint preferential access to a network that matches the LTE systems being built by competitors Verizon Wireless (NYSE:VZ) and AT&T (NYSE:T). LightSquared is still in early trials—and faces stiff opposition from the GPS community over interference issues (CP: The LightSquared Enigma)—so it will take several years to build its network to the scale of Clearwire’s. Sometime after 2012, though, Sprint would have to choose between one network or the other to avoid the hassle of supporting dual-mode WiMAX-LTE phones or even bigger hassle of maintaining two separate 4G device portfolios.