Dead WiMax Deal Could Aid MSOs

A broader relationship between cable and Sprint could emerge with the removal of Clearwire and its business ties to satellite TV duo

Jeff Baumgartner, Senior Editor

November 9, 2007

3 Min Read
Dead WiMax Deal Could Aid MSOs

The scuttled WiMax partnership between Clearwire LLC (Nasdaq: CLWR) and Sprint Corp. (NYSE: S) should be viewed as good news for cable, and unfortunate tidings for two of the industry's main competitive foils -- DirecTV Group Inc. (NYSE: DTV) and EchoStar Satellite LLC , according to one analyst. (See Sprint Reconsiders WiMax Plans.)

On the cable front, the unwinding of the partnership "opens the possibility of cable operators joining forces with Sprint and offering nationwide WiMax," wrote Sanford C. Bernstein & Co. Inc. analyst Craig Moffett in a note sizing up the situation. It may also help to stem a sell-off of Comcast Corp. (Nasdaq: CMCSA, CMCSK) stock "on worries that the company may make a big, value-destructive bet on wireless."

He suggests that Comcast, one of the Sprint-cable joint venture members, might contribute the spectrum it obtained in the AWS auction, and use it as its answer to the wireless question. It might also "remove the overhang of cable potentially bidding in the upcoming 700 MHz auction, with the intended purpose of building out a wireless network itself."

Comcast, as well as other operators, has not spelled out any specific plans to participate in that auction, which will sell off valuable analog TV spectrum as broadcasters transition to an all-digital format in February 2009. However, the National Cable & Telecommunications Association (NCTA) has urged the Federal Communications Commission (FCC) to give cable a fair shot, and to reject arguments that operators might bid for that capacity only to hoard it and keep it out of the hands of broadband competitors. (See Cable Wants In on TV Spectrum Auction .)

Likewise, the cable-led SpectrumCo consortium has not expressed how it will use the AWS spectrum it won last October.

Whether cable and Sprint will come together on a broader wireless play remains questionable, as the partnership has not been on the firmest of ground lately. Sprint has already exercised its right to drop out of SpectrumCo. Then, just last week, the company disclosed it had stopped the expansion of the "Pivot," the wireless voice service offered with cable partners, at 33 markets, citing mounting provisioning issues. (See Sprint to Exit SpectrumCo Venture and Sprint Halts 'Pivot' Expansion.)

Moffett said a broader relationship between Sprint and cable would be complicated by Sprint's pre-existing alliance with Clearwire, which happens to have a WiMax co-marketing arrangement with EchoStar and DirecTV. (See DBS Duo Adds WiMax.)

Moffett said the decision to scrap the Sprint-Clearwire deal is an "incremental negative" for the satellite TV providers because they would have benefited from the additional coverage offered by Sprint's anticipated role in the Clearwire partnership. Sprint was to handle 65 percent of the WiMax buildout. (See Clearwire & Sprint Team on WiMax.)

"A third (unaffiliated) broadband pipe into the home is critical for DBS," Moffett said.

DirecTV and EchoStar still have a co-marketing agreement with satellite broadband service provider WildBlue Communications . DirecTV also is vetting a broadband-over-powerline strategy with Current Communications Group LLC . (See DirecTV Plugs Into BPL .)

— Jeff Baumgartner, Site Editor, Cable Digital News

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About the Author(s)

Jeff Baumgartner

Senior Editor, Light Reading

Jeff Baumgartner is a Senior Editor for Light Reading and is responsible for the day-to-day news coverage and analysis of the cable and video sectors. Follow him on X and LinkedIn.

Baumgartner also served as Site Editor for Light Reading Cable from 2007-2013. In between his two stints at Light Reading, he led tech coverage for Multichannel News and was a regular contributor to Broadcasting + Cable. Baumgartner was named to the 2018 class of the Cable TV Pioneers.

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