UPDATE: Moto’s Clearwire move stirs WiMAX implications
Motorola is acquiring NextNet Wireless, the broadband wireless equipment owned by Clearwire, which also has been the exclusive supplier of equipment for Clearwire's network. The deal puts Clearwire on a path to deploy Motorola’s WiMAX gear, and also may have broader significance for a WiMAX community that is anxiously awaiting word from another major service provider—Sprint—about whether or not it will deploy WiMAX.
The NextNet acquisition was announced in conjunction with a separate investment of $300 million that Motorola is making in Clearwire, and a simultaneous $600 million investment the service provider is receiving from Intel. That financing is the most money Intel Capital has ever invested in a wireless firm (It previously invested an undisclosed amount, believed to be around $20 million, in Clearwire in late 2004). This week’s funding infusion has inspired Clearwire to put off plans for the initial public offering that it filed for just two months ago, and through which it had planned to seek about $400 million in financing.
The acquisition and the investment would seem to lock in Motorola as Clearwire’s future chief supplier of WiMAX network equipment, if not it’s only supplier. “What Motorola has bought here is Clearwire as a customer,” said Monica Paolini, founder and president of Senza Fili Consulting. “That is big because it is something no one else has been able to do.”
It remains to be seen whether any other vendors will be able to get a piece of Clearwire’s network, but Paolini said ongoing pursuit of interoperability for WiMAX CPE should allow subscriber system vendors a ray of hope.
In other ways, this week’s deal also could be very significant for the worldwide WiMAX community. For one thing, it confirms Clearwire’s intent to deploy WiMAX, something which hasn’t always been clear. “It’s going to change things dramatically because before the deal, Clearwire was committed to WiMAX in a distant sort of way,” Paolini said. “There has uncertainty about which way Clearwire would be going.” That uncertainty has ended, and WiMAX appears to have one of its first clear champions—in addition to BellSouth, which recent said it’s testing Alcatel’s WiMAX gear--among large U.S. service providers.
Furthermore, analysts are wondering if Clearwire’s acceptance will give Sprint more incentive to deploy WiMAX itself. Clearwire and Sprint are the top two holders of 2.5 Ghz spectrum, among the first bands in which Mobile WiMAX equipment will be certified for interoperability. For the most part, Paolini said, the markets in which the two companies hold licenses do not overlap. “There’s potential for roaming and some interesting synergy,” she said.
Emmy Johnson, founder of Sky Light Research, added in a research note, “There are two questions on everyone's minds. Is this an Intel strategy to provide an insurance policy for WiMAX because Sprint is favoring another mobile technology? Or is this a clever tactic to influence Sprint's decision toward WiMAX in the interest of nationwide roaming? After all, interoperability, even in the earliest stages of equipment, will not be an issue if one vendor is supplying two large operators owning 2.5 GHz spectrum.”
Clearwire so far has launched service in almost 30 markets around the country, and has used NextNet’s equipment in all of them. As of the summer of 2005, Clearwire officials told Telephony they preferred to have the Bellevue, Wash.-based service provider own its own equipment supplier to give it more control over gear capabilities, and development and delivery timelines. Now, it will be up to Motorola to fit NextNet into its own WiMAX product family, which already consists of both Fixed WiMAX and Mobile WiMAX gear.
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