WiMax on the way: FCC approves Sprint-Clearwire merger

Michael Morisy
With the FCC's official blessing of the Clearwire-Sprint merger Tuesday, WiMax took one step closer to widespread deployment. But in a bad economy, Sprint may have trouble raising the capital to build out the network.

The deal, which had been widely expected to pass, gives a boost to Sprint's bid to helm the nation's first widely deployed 4G wireless network.

"[Clearwire] will enhance competition and

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solidify wireless as an additional broadband platform," said FCC Chairman Kevin J. Martin in an FCC statement on the merger. "Moreover, Clearwire committed to embrace more open networks, one open to all applications and devices. This approach will spur innovation and give greater choice and improved services to consumers."

While the major regulatory hurdles are now passed, financial challenges resulting from the struggling economy have emerged as the network continues its rollout (it is currently commercially available in Baltimore).

"Access to capital is a potential stumbling block," said Stephen Blum, president of telecommunications consultancy Tellus Venture Associates. "All the money in the world disappeared [with the financial crisis]." Without that capital to build out the infrastructure, WiMax may be out the gate a bit slower than executives had hoped.

Despite these financial concerns, executives breathed a little more easily once the decision was final. The initial vote was delayed several hours as details regarding rural subsidies were hashed out and as AT&T argued that closer scrutiny be paid to Sprint's growing spectrum holdings.

"It's never a formality when it comes to the FCC approving something," Blum said.

He pointed to deals like the Sirium-XM radio merger that dragged on for 16 months before FCC approval.

This deal combines the jointly held Clearwire -- a fledgling WiMax operator with stakes held by Comcast, Time Warner, Intel, Google and Bright House -- with Sprint's own WiMax division, Xohm, leaving Sprint with a controlling 51% stake in the new Clearwire venture.

Blum said he attended a panel held Wednesday by Clearwire executives who were clearly happy with the outcome, particularly since the lack of delay in approving the deal meant that the new company could capitalize on its main advantage over LTE -- a quick time-to-market.

"They have a window of opportunity right now because the time frame for LTE is three to five years [from now]," Blum said. He added, however, that WiMax has a narrow window to establish itself as the paradigm for how wireless access is bought and used.

Clearwire is also betting that a host of new devices will benefit from individual Internet access, similar to the way the Kindle uses Sprint's wireless network to download e-books, but on a larger scale and with bigger bandwidth requirements.

The merger was approved in a 5-0 vote of the FCC, and -- according to the Associated Press -- the Justice Department has already indicated that it will allow the deal to proceed.

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