Sprint Agrees to Pay Clearwire $1 Billion for Use of Network

Sprint Nextel, the third- largest US wireless provider, agreed to pay Clearwire at least $1 billion for the use of its so-called fourth-generation network over the next two years.

Clearwire will get $300 million this year, $550 million in 2012, as well as pre-payments of $175 million over at least the next two years. The agreement, which amends an existing deal, is good through November 2013. The deal lets Sprint keep offering wireless service that allows speedier Web browsing and video streaming than its own network. For unprofitable Clearwire, the agreement may provide less funding that some investors had expected, said Michael Nelson, a Mizuho Securities analyst. Sprint also agreed to new terms for prices based on usage of handsets, such as the Evo 4G. The carrier will be allowed to resell the 4G service, operating on a technology known as WiMax, to other carriers, the companies said. The deal resolves a disagreement over how much Clearwire could charge Sprint for use of its service, a dispute that emerged after Sprint began selling smartphones for the fourth- generation network in 2010. That disagreement may have discouraged some potential investors in Clearwire.

GigaOm notes that Sprint and Clearwire make no mention of WiMAX, the 4G technology employed by Clearwire, which leaves open a lot of questions about what 4G technology the two will rely on going forward. Sprint has been testing the more common, alternative 4G technology known as Long Term Evolution, and is reportedly working toward a migration to the technology, something that has been made easier by its network overhaul, which will swap in new multi-modal base stations that can easily support LTE equipment.