WiMax: Cable’s Next Play?
by Todd Spangler -- Multichannel News, 3/31/2008
Their mobile-phone service through Sprint Nextel has fallen flat. Now Comcast and Time Warner Cable may be looking for a wireless do-over of sorts — in a new joint venture with Sprint and Clearwire.
The U.S.’s two largest operators are considering investing $1.5 billion in a new high-speed wireless broadband company operated by Sprint Nextel and Clearwire, The Wall Street Journal reported last week.
The paper, citing unnamed sources, said Comcast would invest $1 billion in the joint venture with Time Warner Cable contributing $500 million. Bright House Networks is also rumored to be in the mix to the tune of $100 million to $200 million.
The joint venture would operate a nationwide network using WiMax technology to provide high-speed Internet access to mobile PCs and mobile devices.
Sprint and Clearwire in July 2007 announced a provisional agreement to build out a nationwide WiMax network. But the pair called off the deal in November, saying they failed to reach terms. Now, they are trying to raise at least $3 billion for a new joint venture, the Journal said.
Cable’s joint venture with Sprint to offer Pivot mobile phone service — resold by Comcast, Time Warner Cable, Cox Communications and Bright House in 33 markets — has been deemed a disappointment by its backers. The Journal’s report said a key problem with Pivot was that cable operators do not control pricing and marketing, a provision they are asking for with the WiMax venture.
Comcast’s rumored $1 billion stake could have an unintended effect, Miller Tabak media analyst David Joyce said: It could wipe out its projected free cash flow growth, if the cable giant contributed between $250 million to $500 million to the JV in 2007.
“The value investor got interested in Comcast again because of the dividend and because it looked like free cash flow growth was starting to emerge,” Joyce said. “This is something that could break that promise.”
Meanwhile, the cable companies in the Pivot JV also own 137 licenses for Advanced Wireless Spectrum (AWS). They have not said what they intend to do with the AWS holdings.
Mike Farrell contributed to this article.
