[Hen] Comm Daily on the Sprint Clearwire news

[Johnson, Bill]

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From: Converged Communications Steering Committee Discussion List [mailto:CCSC at LISTSERV.EDUCAUSE.EDU] On Behalf Of Wendy Wigen
Sent: Friday, May 09, 2008 8:39 AM
To: CCSC at LISTSERV.EDUCAUSE.EDU
Subject: [CCSC] Comm Daily on the Sprint Clearwire news

 

Cable Wireless Plans

New Wireless Venture Seen Drawing Scant Regulatory Scrutiny

Regulators probably won't delay implementation of a planned national WiMAX network via Sprint and Clearwire spectrum holdings, with financing by Comcast, Time Warner Cable, Intel, Google and Bright House, said industry and public interest sources. FCC Commissioner Jonathan Adelstein praised the announced plans, first reported in March by the Wall Street Journal. "I have long pushed for ways to facilitate a 'third' broadband channel to provide consumers everywhere with the benefits of a high-quality wireless broadband network," said Adelstein. Clearwire CEO Ben Wolff told investors he expected the plan to get antitrust and FCC clearance before 2009. The transaction would consolidate much spectrum in the 2.5 GHz band, but probably won't raise significant antitrust or FCC issues, analysts at Stifel-Nicolaus wrote. They expect the government to sign off on the deal, even if review extends into the next administration. However, a Democratic Department of Justice probably would scrutinize the cable operators' roles, the analysts said. "The closer the enterprise moves  toward merely being another element of the cable bundle... then the more the government may constrain the

deal," they said. Google's presence not only as an investor but also as Clearwire search provider, its preferred provider of other applications, and its status as default provider for web and local search services for Sprint probably won't create any hurdles for the transaction, the analyst wrote. However, it could complicate the company's open access efforts with the 700 MHz C Block, they said. The deal lets cable operators offer their own wireless services on Sprint's network and gives them much more control over those services than the failed Pivot joint venture, said Sprint CEO Dan Hesse. "This will allow our cable partners to use their own brand and provide the flexibility that we allow our [other wholesale] customers," he said. Cable operators will have more control over applications they include in their services and how they are priced and bundled with other cable services, Hesse said. And the deal will let them "get to market quickly with a wireless offering in advance of when 4G will be available across the country," he said. Access to the spectrum carries a good wholesale price, Comcast Chairman Brian Roberts said. The deal implies a spectrum value of 25¢ to 33¢ per MHz POP, Comcast said. That's far less than the 54¢ average price in the AWS auction and the $1.29 price in the recent 700 MHz sale, the company said. Combining Sprint's and Clearwire's 2.5 GHz spectrum holdings will give the new venture an average of 151 MHz of capacity in each of the top 100 U.S. markets, the companies said. In markets 101 to 200 the company will have at least 100 MHz on average, Wolff said. The 2.5 GHz band is best for mobile broadband services due to channel size and propagation characteristics, he said. "It's ideal for broadband because high bandwidth wireless networks have to deliver capacity, not just coverage." The deal, which values the new Clearwire at $14.55 billion, calls for Comcast to invest $1.05 billion in the new company, to be 51 percent owned by Sprint Nextel. Intel will invest $1 billion, Time Warner cable $550 million, Google $500 million and Bright House $100 million, the companies said. After the deal closes, Trilogy Equity Partners will buy $10 million in class A common stock at the price the other investors paid. The investments are based on a $20 a share target price for Clearwire stock, with a $17 floor and $23 cap. Sprint's credit ratings won't change because of the new venture, Standard & Poor's said. Google's presence as a financier lends the project cachet, Sanford Bernstein analyst Craig Moffett wrote. "Their participation also likely ensure the venture will genuinely embrace an 'open' platform," he said. Google probably will push the venture toward location- and search-based ad sales, he said. -- Josh Wein Communications Daily

 

 

 

 

Wendy Wigen

Government Relations Officer

EDUCAUSE

1150 18th St. NW Suite 1010

Washington, DC  20036-3824

202-331-5372

wwigen at educause.edu

 

 

 

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