The rumor is bubbling to the surface as the long-term wireless strategies of some U.S. cable operators remain in flux due to Clearwire's tough financial position. Clearwire, which needs US$600 million to add a Long Term Evolution (LTE) overlay that has reached download speeds of greater than 100 Mbit/s in initial tests, will run out of cash before the end of 2012 without more funding. (See Clearwire & LightSquared: Stymied by Borrowing Woes?)
Bloomberg said the talks involving Clearwire, which counts Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. (NYSE: TWC) and Bright House Networks as its current cable investors, are "preliminary."
Among other MSOs, Cox Communications Inc. currently resells wireless services on the Sprint 3G network, while Cablevision Systems Corp. (NYSE: CVC) has shown interest in developing a cellular option with T-Mobile US Inc. , a strategy that now appears to be threatened by AT&T Inc. (NYSE: T)'s proposed acquisition of T-Mobile. TW Cable and Cablevision have also been linked to discussions with LightSquared , which recently struck an 11-year spectrum-hosting deal with Sprint. (See Is AT&T Messing Up Cablevision's Mobile Plans? and Cablevision Also Kicking LightSquared's Tires? )
Why this matters
Clearwire's LTE intentions may make the company more attractive to cable, and cause MSOs to consider a deeper investment or a shared acquisition. Recent tea leaves from cable haven't indicated much optimism about WiMax. In July during TW Cable's second-quarter earnings call, CEO Glenn Britt called the MSO's WiMax subscriber growth "not terribly exciting," and was non-committal about how the MSO might use its Advanced Wireless Services (AWS) holdings. (See TW Cable Stays in Wireless Holding Pattern.)
A bigger investment in Clearwire is just one of several wireless options cable has in front of it. As protection against a complete unraveling of Clearwire, another possible scenario would have Comcast, TW Cable, Cox and Bright House swap their AWS holdings for an equity stake in Sprint. The cable guys aren't expected to pull the trigger on anything involving LightSquared unless the Federal Communications Commission (FCC) approves LightSquared's use of the lower L Band. (See Does Cable Have a Wireless Plan B?)
Catch up on the twists and turns involving Clearwire and Sprint.
- Clearwire Promotes COO to CEO
- Clearwire Goes It Alone With Faster 4G
- Clearwire Posts Loss, Preps for LTE
- Clearwire's Future Unclear at Sprint
- Sprint's $13.5B Jump to LTE With LightSquared
— Jeff Baumgartner, Site Editor, Light Reading Cable