Although it might not make a difference to consumers, the 4G network ripping through Sprint-branded devices such as the EVO 4G doesn't actually belong to the carrier. Rather, Sprint rents use of Clearwire's network, and the two have been duking it out for months over just how much that service is worth. That battle finally came to an end today when Sprint, which happens to be Clearwire's majority owner, agreed to pay at least $1.03 billion this year and next to run its WiMAX devices on the network. The two companies also agreed to mutual wholesale rights, meaning they can sell access to each other's 3G and 4G networks to other providers. And they reached a pricing agreement for phones that offer both 3G and 4G connectivity -- a bone of contention for Sprint, whose customers can't all take advantage of 4G speeds, depending on where they live. Then again, Clearwire needs those billions precisely so that it can expand its network. As for Sprint, it can now blow less cash on legal fees -- and instead gird itself for a potential three-horse race against Verizon and AT&T&T.
[Image courtesy of Mobiledia]
[Image courtesy of Mobiledia]
April 19, 2011
SPRINT AND CLEARWIRE ANNOUNCE KEY ENHANCEMENTS TO THEIR LONG-TERM WHOLESALE REVENUE AGREEMENTS
Companies Amend Long-Term Agreement for Wholesale Pricing for Sprint's 4G Smartphones and All Other 4G Services, Including a Minimum Cash Commitment Totaling at Least $1 Billion to be Paid to Clearwire During 2011 and 2012
Overland Park, Kan. and Kirkland, Wash., April 19, 2011 (GLOBE NEWSWIRE) -- Sprint Nextel (NYSE:S) and Clearwire (NASDAQ: CLWR) today announced an amendment to their long-term agreement that establishes new wholesale pricing terms and provides Clearwire a minimum of $1 billion from Sprint to be paid during 2011 and 2012 for 4G wholesale services comprised of minimum usage commitments of $300 million in 2011, $550 million in 2012 and $175 million in pre-payments for 4G wholesale services to be used in 2011, 2012 and beyond. The parties expect the agreement to continue to drive the growth and collaboration of both companies' strategic 4G initiatives.
"We are pleased to reach this wholesale pricing agreement with Clearwire," said Dan Hesse, Sprint CEO. "We look forward to working with them under this new agreement to provide an expanded offering of 4G capabilities and solutions for Sprint customers."
"Sprint has been our biggest and most important customer and partner since we launched 4G services in the U.S. more than two years ago," said John Stanton, Clearwire's interim CEO. "Today's agreement further aligns Sprint and Clearwire's interests and lays the foundation for a continued, constructive relationship. We are pleased to have the resources and partnerships necessary to maintain our 4G leadership and leverage our significant spectrum and capacity for delivering mobile broadband services."
4G PRICING AND REVENUE COMMITMENTS
In addition to Sprint's commitment of $300 million in 2011, $550 million in 2012, and the prepayment of $175 million, the companies reached an agreement regarding wholesale pricing for Sprint devices that operate on both Sprint's 3G network and Clearwire's 4G network. This includes smart phones such as the award-winning HTC EVO™ 4G and Samsung Epic™ 4G and other dual-mode devices like the newly introduced Novatel Wireless MiFi® 3G/4G Mobile Hotspot 4082.
The agreement includes usage based pricing and volume discounts and is aimed at aligning the interests of both companies to enable growth for customers using smart phones and dual-mode devices. The agreement also includes minimum payments per 4G device.
Clearwire and Sprint also plan further collaboration to expand Sprint's capability to offer customized solutions using 4G technology. This is expected to allow Sprint to better serve its target enterprise and government customers with mission critical wireless broadband solutions both for mobility and local area network applications and expand its Machine-to-Machine (M2M) solutions for large and small businesses.
The agreement also expands the mutual re-wholesaling rights whereby both companies can resell the other's respective 3G and 4G networks to other parties. The agreement is expected to open up new market segments for both Sprint and Clearwire to both jointly and independently pursue.
The long-term partnership between Sprint and Clearwire has been one of the most productive in the U.S. wireless market. Together, the two companies deployed the first true 4G network in North America, leading the wireless industry's rapid progression to a mobile broadband future while making 4G a household word. The Clearwire 4G network is backed by some of the leading companies in telecommunications and technology, including Comcast, Time Warner Cable, Intel, Google and Bright House Networks.
With flexible all-IP network architecture and substantial wireless spectrum depth, the Clearwire 4G network is well positioned to continue serving the company's customers and wholesale partners' demands for fast, reliable, high-capacity mobile broadband service across the U.S.