Sprint/Clearwire WiMAX launches with $3.5 billion in funding

Sprint today renewed its WiMAX relationship with Clearwire in a very commanding way, raising the distinct possibility that they could surprise the rest of the industry by leapfrogging over AT&T and Verizon in the 4G wireless space.

Under a deal unveiled this morning, Sprint and Clearwire will combine their WiMAX holdings in a new wireless broadband company to be dubbed Clearwire, funded by $3.2 billion in investments from Google, Intel Capital, Comcast, Time Warner Cable, and Bright House Networks.

Known collectively as Xohm, the combined WiMAX holdings operate in the 2.5 GHz wireless spectrum. The new Clearwire -- to be headed by executives from both Sprint and the "old" Clearwire -- has already set a goal of reaching 120 to 140 million people via wireless broadband by 2010.

As previously reported, Sprint invested in WiMAX long before the recent buys by Verizon and AT&T of 700 MHz spectrum, and the company's original intent revolved around getting into broadband before any major competitors. But last November, the financially strapped telco canceled a deal inked with Clearwire some five months before, sparking doubts among many that WiMAX would even stay in the 4G race.

With today's announcement, WiMAX could be better off than ever, and so could Sprint, Beyond their commitment for financial backing, the five investors in the new Clearwire have also entered into new commercial relationships around the new 4G service and Sprint's existing 3G service.

Comcast, Time Warner, and Bright House will become wholesale providers of both the 4G Clearwire service and Sprint's 3G service, further extending the coverage of both wireless networks. Clearwire will be a Sprint 3G provider, too.

Intel, for its part, will work with manufacturers on embedding its previously announced WiMAX chips into laptops and other Intel-based mobile Internet devices for use on the Clearwire 4G network. But in a new twist on Intel's WiMAX plans, Intel will now market Clearwire's service in association with its own performance notebook PC brand.

Also in a somewhat new departure, Google will team with Clearwire on developing applications, advertising, and Internet services for mobile applications, as well as on a new "open Internet business protocol" for mobile business devices.

In turn, Clearwire will support Google's Android application development environment in future voice and data devices for retail customers. Unlike either AT&T or Verizon, Sprint is already a member of the Google-spearheaded Open Handset Alliance (OHA).

But Sprint officials are probably the least astonished of anyone about today's turn of events.

Throughout consecutive quarters of falling revenues, Sprint has continually tested its planned WiMAX service, and up until today, company executives had never stopped thinking out loud about some sort of a possible WiMAX spinoff.