In what likely will be the biggest communications technology story of the week, Sprint Nextel (News - Alert) and Clearwire Corp on Wednesday announced the merger of their wireless broadband businesses. The newly formed venture, to be called simply Clearwire (News - Alert), will be charged with building the first nationwide WiMAX network in the U.S.

 

The deal signals success of a WiMAX (News - Alert) deal between Sprint Nextel and Clearwire that was first proposed last summer, but fizzled in November.

 

Just as significant as two such big names coming together on a WiMAX initiative are investments from several other major players in the communications technology industry. Google (News - Alert), Intel Corp (through Intel Capital), Bright House Networks and Time Warner Cable are collectively investing $3.2 billion in the new Clearwire.

 

Sprint will own the biggest stake in the new Clearwire--about 51 percent. Existing Clearwire shareholders will own about 27 percent, and the new investors (as a group) will acquire about 22 percent, assuming an investment price of $20 per share.

 

The significance of so many big names getting behind WiMAX sent tongues wagging Wednesday and raised hopes that perhaps this technology will finally take off in the U.S.

 

"If you're a big fan of this technology and want it to succeed, this is the best news you've heard in a long time," commented Anthony Sabino, a professor of law and business at St. John's University who has a background in business litigation. "Its chances of catching on and becoming well-established just significantly rose. WiMAX is not an orphan anymore."

 

TMCnet contacted Sabino for his perspective, as a business law expert, on the Sprint Nextel/Clearwire merger. He said that perhaps the most significant thing about the deal is the big names involved — the investing companies and the personalities behind those firms.

 

For example, Sabino said, it is significant that Craig McCaw (who built McCaw Cellular into a major cell phone company before selling it to AT&T (News - Alert) in 1999 for $11.5 billion, and who is Chairman of the existing Clearwire Corp.) is putting his weight behind this deal.

 

"Here's a guy with tremendous experience, and tremendous reputation in the field, aligning himself with these major players," Sabino told TMCnet. "If anyone doubted that this technology had arrived, all doubts were erased as of this morning. WiMAX is real and it's here to stay. When you have this kind of backing, assuming the technology does not break down, they're going to make it work."

 

Of course, Sabino cautioned, nothing is for sure when it comes to technology. The companies involved in this deal are committing to WiMAX for the long haul, but each has shareholders to answer to and at some point will need to begin seeing return on investment. No-one knows what that expected time-frame might be, though.

 

One thing's for sure: major players in the communications technology industry think WiMAX has enough potential to back a huge deal and invest the resources need to make it successful. The investors also likely see this as an opportunity to diversify their businesses. If WiMAX takes off, they can't afford to be left behind. At this point, it's more likely they'll leave others behind.

 

As Sabino put it, any company hoping to compete with the new Clearwire in the WiMAX space will face an uphill battle.

 

·        Sprint and Clearwire Scrap WiMax Pact

·        The Future is UnClearWire

·        Sprint Nextel and Clearwire to Terminate WiMAX Letter of Intent