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Clearwire gets a breath with $1.5 billion investment

Clearwire said it received $1.5 billion in funding from its motley consortium of early investors, opening a new chapter for the high-speed wireless Internet service provider that is gearing to go up against Verizon Wireless and AT&T for future mobile customers.

The Kirkland, Wash.-based company is seen by policymakers as a potential competitor in a consolidated wireless industry. AT&T and Verizon are the only other national service providers building out fourth-generation, or 4G, mobile networks. The Federal Communications Commission is investigating whether the wireless industry is competitive enough or whether consolidation (there were six providers of wireless service a few years ago and now that number is down to four) is hurting the industry and trickling down to less choice and higher prices for consumers. The FCC is looking into practices such as exclusive handset deals, to see whether those partnership edge out smaller competitors.

Wireless service operators strongly refute such claims, saying mobile phone users have more choices today than ever from hundreds of handsets to choose from and what they describe as reasonable prices for service plans.

But the firm faced difficult financing conditions with the economic downturn and an executive overhaul during the past year.

Last week, it appointed David Maquera, a former executive at Cricket Wireless, as its chief strategy officer. The company recently announced that its chief marketing officer, Atish Gude, was leaving. And eight months ago, it named Bill Morrow as CEO, replacing Ben Wolff, who now serves as the co-chairman of the board with Craig McCaw.

Sprint, the nation's third-largest wireless operator, was the biggest investor. Those investors included Sprint Nextel for $1.176 billion, Comcast for $196 million, Time Warner Cable for $103 million, Intel for $50 million, Eagle River for $20 million and Bright House Networks for $19 million.

Noticeably absent from the roster of investors was Google, which pumped money into the WiMax service operator with them in May 2008. The investors collectively put $12 billion into the firm.

Reuters reported that Google said it wouldn't put more money into Clearwire, but would help with strategy and producing new products for the network.

“While we are very pleased to have every one of our investors, we are particularly pleased and honored that Sprint Nextel, Comcast, Time Warner Cable, Intel, Eagle River and Bright House Networks have decided to provide this additional round of strategic financing," Morrow said in a release. "Together, we share a common vision of providing consumers and businesses with a new category of Internet service capable of meeting the growing demand for mobile data.”

By Cecilia Kang  |  November 10, 2009; 10:51 AM ET
Categories:  AT&T , Clearwire , FCC , Google , Mobile  
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Comments

Google booster Cecilia Kang, whose blog features ads provided by Google (and every page of which contains Google's logo at least twice), naturally wants to cast this development regarding Clearwire -- in which Google is a major investor -- in the best possible light. But the fact is that the firm is burning through capital and is still not profitable. It would have to be run very, very differently to make money.

This article further neglects to mention fixed wireless broadband, which provides substantial competition for DSL and cable modem service. It likewise fails to question the assertion, made solely by Clearwire, that WiMax is a "4G" technology.

Posted by: squirma | November 11, 2009 1:00 PM | Report abuse

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