Technology Group Plans Wireless Network
SAN FRANCISCO — A who’s who of technology and telecommunications companies announced Wednesday that it intended to build the first of a new generation of nationwide wireless data networks.
The partners have put the value of the deal at $14.5 billion, a figure that includes radio spectrum and equipment provided by Sprint Nextel and Clearwire, and $3.2 billion from the others involved.
They expect the network, which will provide the next generation of high-speed Internet access for cellphone users, to be built in as little as two years, but there is no timetable on when it will be available to users and the price is not determined. The partners are seeking to beat Verizon Wireless and AT&T Wireless to the market.
Sprint Nextel, based in Overland Park, Kan., will be the majority owner with a 51 percent stake, while existing holders of Clearwire, based in Kirkland, Wash., will have 27 percent.
The partnership of such fundamentally different companies underscores the convergence of Internet, entertainment and telecommunications services. The wireless network of the future is expected to be fast enough — rivaling speeds that cable customers have in their homes today — to allow delivery not just of text and simple Web pages, but of video and advertising.
The chairman of Clearwire, the industry pioneer Craig O. McCaw, said in a statement: “The power of the mobile Internet, which offers speed and mobility, home and away, on any device or screen, will fundamentally transform the communications landscape in our country. We believe that the new Clearwire will operate one of the fastest and most capable broadband wireless networks ever conceived, giving us the opportunity to return the U.S. to a leadership position in the global wireless industry.”
But it also faces considerable challenges. Given the peculiarities of the wireless spectrum that the partners intend to use to deliver the data signal, it may not be easy for the group to create a wide-ranging and adequately reliable service, according to Craig Moffett, a telecommunications industry analyst with Sanford C. Bernstein & Company.
He noted that the partners involved were top companies, but that could also work against the interest of the group. Each member has a somewhat different agenda and that could lead to conflicts over operating and managing the network, he said.
Sprint Nextel, which has struggled in recent years against a much stronger Verizon and AT&T, is looking to capitalize on its ownership of spectrum; the cable companies are looking to create an additional service to provide broadband access outside the home; Intel would like to sell its chips and generally expand computer use; and Google hopes to develop another platform for advertising, according to people briefed on the deal.
“Whether it looks good on paper, I’m not sure,” Mr. Moffett said. “There certainly are a lot of question marks that surround the viability of a proposition like this.”
The announcement of the partnership comes as the wireless data business is growing, but one that wireless providers think has vastly more potential. For example, wireless data — predominantly text messaging — constituted 23 percent of Verizon Wireless revenue in the first quarter, up from some 17.5 percent in the period a year earlier, Mr. Moffett said.
The hope of the telecommunications industry is that users will begin using such service for a range of applications, including surfing the Internet on laptops and phones, and downloading music and video more often to those kinds of devices.
The disparate nature of the participants in the Clearwire partnerships also hints at the possibilities. Perhaps most significant is the participation of Google, the search advertising company, which has provided $500 million for the operation.
Google will provide the search engine abilities for the wireless platform, enabling it to sell advertising there. Google took a similar approach in an initiative to use a free Wi-Fi network in Mountain View, Calif., where the company is based, and in a failed plan for a Wi-Fi network blanketing San Francisco.
The investments by other participants include $1.05 billion from Comcast, $1 billion from Intel and $550 million from Time Warner Cable. Bright House, a cable provider, will invest $100 million, while a private investment group with wireless industry expertise, Trilogy Equity Partners, intends to invest $10 million.
Benjamin G. Wolff, the current chief executive of Clearwire, will retain that title in the new company. Barry West, Sprint’s chief technology officer, will be president.