Sprint Nextel's fumbling of its proposed Mobile WiMAX network and its pandering to its investors that it's "investigating options" for its 2.5 GHz spectrum is, to me, really starting to impact on Sprint Nextel's overall credibility. Sprint Nextel's latest ramblings, reported in the Financial Times, simply smack of desperation. It's abundantly "clear" (no pun initially intended) that Clearwire is the only US company poised to take full advantage of 2.5 GHz in the US to offer Broadband Wireless Internet Access services. AT&T and Verizon Wireless would probably be willing to buy Sprint Nextel's 2.5 GHz spectrum, but that would be a horrific strategic blunder in making those two behemoths an even stronger competitive threat against Sprint Nextel - expedited corporate suicide. T-Mobile has its corporate hands full and isn't in position to exploit 2.5 GHz.
Coldly realistically, Clearwire is the only company that can immediately exploit Sprint Nextel's 2.5 GHz spectrum, thus realizing the maximum immediate financial value to Sprint Nextel. If Sprint Nextel continues to dither, executing only half (hearted) measures such as merely deploying Mobile WiMAX in a few token markets, the financial value that Sprint Nextel could realize from its 2.5 GHz spectrum would considerably diminish. It's a Hobson's Choice for Sprint Nextel - it can bow to reality and sell off its 2.5 GHz spectrum to Clearwire, perhaps getting an equity stake in Clearwire's likely subsequent success in offering Mobile WiMAX services. If Sprint Nextel doesn't sell its 2.5 GHz spectrum to Clearwire, it risks damaging Clearwire (as the most viable, motivated, and entity most likely to offer top dollar), diminishes the overall value of its 2.5 GHz spectrum as investors come to realize that Sprint Nextel will just "sit on" the majority of its 2.5 GHz spectrum, and in the end, weakening Sprint Nextel even more. Yes, the proposed partnership with Clearwire was "too complex", but that partnership was the only viable scenario for Sprint Nextel to actually deploy a Mobile WiMAX network - in cooperation with Clearwire, not in competition with them. With the partnership with Clearwire no longer a possibility, Sprint Nextel needs to endure the pain of quickly divesting itself of the 2.5 GHz spectrum and get back to working on its many other challenges - migrating (its few, and shrinking) Nextel users off 800 MHz, continuing to build out its 1xEV-DO Rev. A network on 1.9 GHz spectrum, and try to regain some standing among consumers against marketing onslaughts from AT&T and Verizon Wireless. Confident prediction on my part - Clearwire (being driven behind the scenes by the Machiavellian Craig McCaw) will, in the end, end up controlling Sprint Nextel's 2.5 GHz spectrum. It's simply a matter of whether Sprint Nextel will bow to that reality and negotiate now, from relative strength, or McCaw ends up picking up Sprint Nextel's 2.5 GHz spectrum much more cheaply from a weakened Sprint Nextel in a corporate fire sale.
By Steve Stroh
This article is Copyright © 2007 by Steve Stroh except for specifically-marked excerpts. Excerpts and links are expressly permitted (and encouraged).
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