First, Sprint was in talks with T-Mobile about a merger. Then, the AT&T and T-Mobile buyout is announced. Why did this happen and what can we expect for the future?
Companies
Clearwire, the financially troubled WiMAX conglomerate shared grim news in a conference today, announcing that CEO Bill Morrow would be stepping down “for personal reasons.” He is also leaving the company’s board of directors. Morrow will be replaced in the interim by board chairman John Stanton. Other senior positions at Clearwire will be vacated as well, requiring a shake-up of executive talent at the company.
According to the press release, this changing of the guard should not impact the company’s talks with its partner Sprint. Sprint, Clearwire’s majority owner, has engaged the WiMAX company in a pricing dispute, the resolution of which as yet to be determined. Clearwire assured investors that “an agreement with Sprint is imminent.”
Clearwire has been hit recently with all sorts of issues. If the muddle with Sprint and exec shuffle aren’t enough, Clearwire is still in dire need of funding to complete its rollout of a national 4G WiMAX network. And they’re being sued. In a claim filed just a week ago, several Clearwire subscribers claim that the company has deliberately slowed their internet connections in order to ease congestion on its network. Such practices are not uncommon in the telecom world. Verizon also began ‘throttling’ its network this year, though they’ve been extremely transparent about how and when they manipulate the network and who’ll be affected. Comcast did settle a throttling case for $16 million in 2009, when they were sued for throttling the connections of a specific company.
The plaintiffs claim that Clearwire falsely advertises for high-speed internet that they won’t end up providing and penalizes those who wish to cancel their service by tagging them with an early termination fee. Furthermore, they claim that the WiMAX company is running a Ponzi-esque scheme wherein they attract subscriptions under the pretense of providing high-speed internet. In fact, say the plaintiffs, the company lacks the infrastructure necessary to power its network. By signing up customers, Clearwire hopes to drum up enough money to someday complete their network rollout and make good on these promises and advertisements.
Whether or not these claims will be vindicated, it seems pointless to say that the future looks bleak for the 4G company. … Read the rest
A Sprint executive revealed this week that the major telecom corporation has been considering the deployment of a nationwide LTE network by 2013. At face value, this may not seem unusual. Verizon, AT&T, and T-Mobile have all launched or committed to build LTE networks – a similar move by Sprint would only extend its compatibility and range of services. But the announcement comes as Sprint nears the conclusion of arbitration talks with its partner Clearwire. Clearwire operates the US’s largest WiMAX network, Sprint’s only 4G service. Sprint is majority owner of the 4G conglomerate. The two companies have been at loggerheads over a pricing war and talk of a Sprint LTE network could imply a pending divorce between Sprint and its current WiMAX operator.
If such a schism would occur, it would spell disaster for Clearwire. The young telecom is already muddled in funding issues for the completion of its 4G WiMAX network. If it loses its majority partner, Clearwire might as well just throw in the tower.
But don’t call your stockbroker yet. Sprint’s president of network operations and wholesale, Steve Elfman, assured listeners at the Morgan Stanley Technology, Media & Telecom conference that the company won’t make a final decision until the end of the second quarter, when all friction with Clearwire has been sorted out. Still, Sprint’s position is threatening. In an interview with The Wall Street Journal, Dan Hesse, Sprint’s chief exec said: “Our Plan A is together with Clearwire, but we do have a Plan B. If we don’t reach agreement, we will go and do our own thing.” It’s clear that Sprint is planning future strategies solo. How this will affect the future of WiMAX technology in the US, only the second-quarter will tell.… Read the rest
Despite losses this quarter and predictions that rival LTE will overtake Clearwire’s WiMax service sometime over the next couple of years, the wireless service provider is optimistic about future growth.
