Comcast, Sprint, Google May Fund WiMax

PHILADELPHIA (AP) -- Major cable, telecom and Internet companies are in preliminary, but serious, talks to create a national wireless network that would link devices such as computers, televisions and cell phones, according to a person familiar with the talks.

Comcast Corp., Time Warner Cable Inc., Bright House Networks, Google Inc., Intel Corp., Sprint Nextel Corp. and Clearwire Corp. are considering investing a total of $3 billion to $4 billion in the joint venture, said the person, who asked not to be named because the person was not authorized to discuss the talks.

Sprint and Clearwire, a startup founded by cellular pioneer Craig McCaw, have already announced their plans to build out a network using WiMax technology, but had been looking for outside funding.

WiMax promises faster wireless connection speeds for laptops and phones than the latest networks run by cell-phone operators, and it is even seen as a potential competitor to fixed-line broadband like DSL.

Comcast, Google and Intel are each considering putting in about $1 billion into a new company that would operate the network, the person said. Time Warner Cable's portion is $500 million while privately held Bright House could contribute $100 million to $200 million, the person said.

Intel has been heavily involved in developing the WiMax technology and will be making WiMax chips for computers, set-top boxes and cell phones.

The joint venture would be a way for cable companies to participate in a wireless strategy without owning a mobile phone company, something Comcast CEO Brian Roberts had said wasn't attractive.

In a research note, Sanford Bernstein analyst Craig Moffett said the deal would be a win for Sprint and Clearwire, whose spending would be reduced with the entry of additional investors.

The picture isn't clear for cable operators, because investors have been calling for cutbacks in capital spending and immediate return of free cash flow, Moffett said. He said, however, that cable companies would at least ensure that there will be wireless broadband that's not controlled by rival phone companies such as Verizon Communications Inc.

The Wall Street Journal first reported on the talks late Tuesday.

Negotiations began in March and Sprint was pushing to get a deal by next week, in time for a wireless industry trade show in Las Vegas, the person said. Although there's a possibility that the deal could be finalized in the next few months, it could also fall through.

The person said the partners will not use the spectrum owned by SpectrumCo, a joint venture between cable companies and Sprint. Its largest stakeholder is Philadelphia-based Comcast. Wall Street has been speculating about cable's wireless strategy since the 2006 purchase of the spectrum for $2.4 billion.

Clearwire was founded in October 2003 by McCaw, a Seattle billionaire who started McCaw Cellular, which was eventually acquired by AT&T Inc.

The Kirkland, Wash.-based wireless Internet service provider raised $900 million in a round led by Intel's venture capital arm in 2006. The funding was meant to speed development and deployment of WiMax networks. Motorola Inc., another investor in that round, agreed to supply wireless broadband equipment for existing and future Clearwire networks.

Clearwire's March 2007 initial public offering didn't go over well on Wall Street. The company offered more shares than expected at the highest possible price, which analysts said watered down demand, and the stock fell on its first day of trading.

Shares of Overland Park, Kan.-based Sprint rose 14 cents, or 2.2 percent, to $6.56 in afternoon trading Wednesday, while Kirkland, Wash.-based Clearwire rose 48 cents, or 3.6 percent, to $13.88.

Comcast shares fell 87 cents, or 4.2 percent, to $19.67, and New York-based Time Warner lost 87 cents, or 3.3 percent, to $25.40.


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