Sprint Nextel and Clearwire plan to jointly construct the first nationwide mobile broadband network using WiMAX technology, and promote the global development of WiMAX-based services. The planned arrangement, which is set out in a letter of intent, is expected to provide broad benefits to consumers, businesses, educators, the Federal government and public safety users by fostering quicker, broader and more efficient deployment of a mobile WiMAX broadband network than either company could accomplish on its own.
The WiMAX network is being designed to deliver mobile broadband services in urban, suburban and rural markets, and enable significantly greater depth and breadth of services. The arrangement also is expected to enable each company to increase capital efficiency and reduce overall network development and operating costs.
Sprint Nextel and Clearwire expect to build their respective portions of the nationwide network, and enable roaming between the respective territories. The companies also will work jointly on product and service evolution, shared infrastructure, branding, marketing and distribution. Additionally, the companies intend to exchange selected 2.5 GHz spectrum in order to optimize build-out, development and operation of the network.
The arrangement is subject to the execution of definitive agreements, which are expected to be finalized within the next 60 days. It is also subject to review by the Department of Justice, and approval of spectrum license assignments and transfers by the Federal Communications Commission.
Sprint Nextel and Clearwire intend to provide consumers, businesses and distributors across the country with access to the open Internet over a robust wireless broadband network that is being designed to deliver comparable speeds to existing wireline broadband services and offer maximum customer flexibility. Additionally, the Federal government and public safety agencies, which rely heavily on wireless networks during times of crisis, are expected to benefit from the mobility afforded through the WiMAX network to access their Internet-based communications, applications and content.
"This arrangement will result in stronger competition in the rapidly growing market for broadband services, and will provide consumers, national enterprises and other businesses, educators and public safety agencies greater choice and faster access to a revolutionary mobile broadband technology," said Sprint Nextel Chairman and Chief Executive Officer Gary Forsee. "It will further our objective of delivering mobile WiMAX service across the country and help fulfill our vision of delivering mobility products and services across all our networks."
"Our joint efforts will result in customers benefiting from a more extensive network, operating sooner and using our respective spectrum more efficiently than either company could have on its own," said Clearwire Chief Executive Officer Ben Wolff. "Our companies share a vision of doing for the Internet what cellular and PCS networks did for voice communications starting more than twenty years ago. Based on this shared vision and the expected benefits to each company and our respective shareholders and customers, it is natural that we would work together," Wolff said.
Under the network build-out plan, Sprint Nextel will focus its efforts primarily on geographic areas covering approximately 185 million people, including 75 percent of the people located in the 50 largest markets, while Clearwire will focus on areas covering approximately 115 million people. Initially, the two companies expect to build out network coverage to approximately 100 million people by the end of 2008, with seamless roaming enabled between the deployed areas.
The arrangement also will provide for the exchange of spectrum between Sprint Nextel and Clearwire to enable each company to build out its portion of the network and to enhance service in its build-out territory, as well as for the exchange of other assets associated with this spectrum. In addition, Clearwire will have the ability to utilize certain Sprint Nextel infrastructure.
Sprint Nextel and Clearwire will market mobile WiMAX services under a common service brand, and Clearwire will offer mobile WiMAX services in Clearwire's territories through Sprint Nextel's retail stores, and through its own distribution channels. Both companies will provide seamless reciprocal roaming service to each others' WiMAX customers, and Sprint Nextel plans to provide dual-mode (CDMA-WiMAX) services nationwide to its customers over both its own and Clearwire's portion of the WiMAX networks.
Sprint Nextel will take the lead in establishing relationships with national distributors and other potential strategic partners, including wholesale or mobile virtual network operator (MVNO) arrangements. Clearwire will have the ability to offer Sprint Nextel's third generation voice and data services as part of a bundle or on a stand-alone basis to Clearwire's customers, which will also allow Clearwire to provide dual-mode services to its customers. The initial term of the arrangement is 20 years, with three 10-year renewal periods.
As previously announced, Sprint Nextel expects to commence the initial stage of its mobile WiMAX network deployments by year-end 2007 and both companies expect to launch commercial service in the first half of 2008. The companies individually are working with a broad range of manufacturers including Intel, Motorola, Samsung, Nokia and others to create an ecosystem of chips, products and software designed to provide mobile WiMAX access.
Mobile WiMAX is a wireless broadband technology that is designed to operate more than five times faster than today's third-generation wireless networks at lower cost. Mobile WiMAX technology is expected to allow users to wirelessly download full-length movies and songs, conduct live video-conferences from remote locations, and perform other interactive multi-media applications anywhere in the coverage area, mobilizing the full power of the open Internet. The technology is expected to be deployed ubiquitously with embedded chipsets in computing, consumer electronic devices and other innovative access devices being developed by a global ecosystem.