Sprint’s good neighbor CEO Dan Hesse has been very vocal about his dislike for the pending AT&T T-Mobile acquisition. Naturally, Hesse proclaims that the merged company would form a situation where two companies, Verizon and AT&T, would dictate the cost of much needed infrastructure equipment. This would put both companies at an unfair advantage over Sprint as Sprint tries to build out their 4G network and improve upon existing equipment.
So Sprint responds today with a move of their own by committing to an investment of $1 billion dollars to Clearwire over the next two years. The deal between Sprint and Clearwire expands upon the original partnership forged when Sprint gained 54% ownership of Clearwire.
More after the break
Sprint’s new investment into Clearwire calls for a $175 million dollar investment up front, $300 million later this year and $550 million in 2012. Although $1 billion dollars is a lofty investment analysts agree it may not be enough to get Clearwire back on level ground. At this point it’s a band aid to stop some of Clearwire’s bleeding.
It’s also unclear at this time what Clearwire’s continued build out strategy is. Clearwire reached their road mapped, build out goals at the end of 2010 without a clear strategy (no pun intended) going forward.
Since a networking roundtable held at the Mobile World Congress event in Barcelona in February, it’s been up in the air as to whether Sprint wants to continue operating their 4G using Wimax or if they are going to move to the industry standard 4G LTE.
Although both companies need to do something, this $1 billion dollar investment doesn’t seem to be the something they needed to do.
Clearwire is hopeful with this current pledge from Sprint they will be able to raise funds on their own to help secure build out goals. In this new arrangement Sprint gets usage based pricing and volume discounts while Clearwire gets minimum payments per 4G device. It’s important to note it’s these minimum payments for 4G devices that dictated the $10 extra payment passed onto customers for “4G”.
The $10 “4G” stipend caused Sprint a great deal of angst from their smartphone customer base, especially customers who purchased the HTC Evo 4G in 3G markets with no clear path to 4G expansion. Customers in that situation were upset they had a “4G” surcharge in a non 4G area. To satisfy customers Sprint decided to change the name of the charge and it’s now a “smartphone” charge.
With Clearwire in the shape that it’s in, Sprint may have been better served investing some of the $1 billion dollars into grass roots educational campaigns to block the pending AT&T /T-Mobile merger. Despite having a grueling regulatory period ahead of them, most analysts feel that the AT&T /T-Mobile merger will ultimately end up happening within the years time AT&T forecast it to take when announced on March 20th 2011.