Is the new Sprint/Clearwire venture doomed to failure?
The deal to merge Sprint Nextel's WiMax business unit with Clearwire to build a nationwide 4G network is finally complete, but the newly formed company could be doomed before it even gets out of the gate. On Wednesday the companies said they would combine the two entities to form a new company, called Clearwire. Cable companies Comcast, Time Warner, and Bright House Networks, and technology giants Intel and Google are contributing a combined $3.2 billion, bringing the total investment in the company to $14.5 billion. In many ways the new venture is a win-win situation for Sprint and Clearwire, which, if truth be told, had no other option than to team up. Sprint, which has steadily been losing customers after its failed 2005 merger with Nextel, gets to shed an expensive and resource sucking venture. And Clearwire, which hasn't been profitable since it went public a year ago, gets more spectrum assets and capital to build the network .Wall Street had been getting fed up with each company, so a deal to merge the entities was a no-brainer. But as someone who has watched big technology mergers form and unwind over the past decade, I'm not convinced that the new Clearwire will actually make it in the end. That said, I think at the very least the new company will spur quicker innovation of broadband wireless technology and force operators like AT&T and Verizon Wireless to deploy their own networks more quickly. In this respect, consumers will likely have Sprint and Clearwire to thank for helping bring true wireless broadband services to a plethora of consumer electronics devices.
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