Sprint is utterly sick of Clearwire. The startlingly incompetent WiMAX provider has seemingly run out of patience from its majority owner. Sprint owns 54 percent of Clearwire, but apparently Clearwire's management is so hapless that Sprint wouldn't mind too much if the whole thing went bankrupt, as long as Sprint could make a deal to keep a network lit up for its own 4G wireless subscribers.
This unfortunate state of affairs comes from the sucker bet Sprint made when it merged with Clearwire's last incarnation to become a "nationwide" WiMAX provider. Sprint ponied up the dollars and is the number-one user of the network, but doesn't actually control the company.
"We have no control or governance in the decisions Clearwire made ... and we have suffered for it accordingly," Sprint's president of network operations, Steve Elfman, said today.
That quote came after Sprint's financial analyst meeting basically melted down in a hail of hostile questions about whether Clearwire was going bankrupt, what Sprint planned to do about that, and why Sprint execs refused to answer questions about a company of which they owned more than half.
Clearwire's Lost Chances
It's understandable why Sprint is so annoyed, as Clearwire totally squandered a huge lead in 4G. By launching WiMAX in 2008, Sprint and Clearwire had a two-year jump on other carriers's 4G networks. But Clearwire's city networks were pockmarked with dead spots, and the company hasn't rolled out a single new city this year. Clearwire's slow, spotty rollout let T-Mobile, and then Verizon Wireless, outpace Sprint on 4G.
You know Sprint is sick of Clearwire when the company puts LightSquared above Clearwire on its 4G rollout strategy. LightSquared, you may recall, is the 4G firm that is currently being blocked by the government from launching its network because it makes aircraft GPS go all wobbly.
Sprint distancing itself from Clearwire can't just be boiled down to WiMAX vs. LTE. Sprint announced its LTE plans today, but Clearwire is also going to LTE. You have to ask why Sprint feels it can't trust its long-term, majority-owned partner to be the backbone of an LTE transition that they both agree needs to happen. (They may want to use different forms of LTE, but they could work that out if they tried.)
Clearwire, for its part, insists Sprint still needs it because of Clearwire's "unmatched spectrum." Regarding Sprint's plans to use its own spectrum for 4G, "it's obvious that their spectrum resources are insufficient to meet the long term demands of mobile data," Clearwire said in a statement.
"Sprint has 9 million customers on WiMAX. WiMAX isn't going away," a Clearwire spokesman told my colleague Sara Yin. Furthermore, "We have enough spectrum depth to launch an LTE network of our own, alongside WiMAX."
The Painful Truth About Clearwire
Clearwire may not be able to build a network, but it's sitting on the nation's largest bucket of fallow, unused wireless spectrum. As all of the wireless carriers go begging for spectrum, Clearwire is rolling in it—but not bringing new cities online.
Clearwire's statement doesn't address that, of course. It's basically, yada yada, lots of spectrum, lots of devices, no plans to actually expand its geographical buildout. Read between the lines and the company is practically begging Sprint to make some sort of deal where Sprint does the actual heavy lifting and Clearwire supplies the spectrum.
To Clearwire's (limited) credit, it's very hard and expensive to build a nationwide wireless network. That's one of the reasons we have to stop the merger of AT&T and T-Mobile; once a competitor is gone, it will be extremely difficult for a new entrant to pop up in its place. Building a network takes years and billions of dollars, and Clearwire has just never had the cash.
Clearwire is absolutely right that Sprint's cobbled-together 1900Mhz CDMA and 800Mhz iDEN spectrum might not be a great comeback to Verizon's roomy 700Mhz LTE network, and that putting all of your chips in LightSquared's bucket might leave you like that sad walrus, without a bucket. (Google it.) It's good to hedge that bet.
But Sprint is also right to be fed up with Clearwire's inability to build a national network and its perpetual financial woes. The answer here is for Sprint to demand much more control over Clearwire, even if it has to negotiate that in a bankruptcy court. I can't find anyone who has faith in Clearwire to actually build a national network at this point, and Americans need better wireless broadband. If Clearwire can't provide that on its spectrum, it should move aside for someone who can.