Clearwire Spectrum Sale Would Stimulate Mobile Backhaul Market
Clearwire Corp. apparently is seeking to raise $2.5 billion to $5 billion in a wireless spectrum auction that has firms including AT&T, Verizon Wireless, Deutsche Telekom AG, Time Warner Cable Inc. and Sprint Nextel Corp. among the potential bidders, Bloomberg reports.
The bidding is in its second round and is being managed by Deutsche Bank AG, Bloomberg says. Clearwire is said to be offering spectrum up to 40 Mhz of bandwidth per market.
What cannot be determined now is what impact any spectrum sale would have on the wireless backhaul business. Assuming the spectrum is used to create a new 4G network, additional radios would be needed, as well as transmission sites. But it isn’t clear whether any new network could leverage some existing towers and backhaul facilities, instead of building entirely-new facilities.
The degree of sharing might depend on who wins the new spectrum. AT&T and Verizon would be able to leverage many backhaul and tower assets, while Sprint Nextel or T-Mobile USA arguably would be able to leverage fewer backhaul assets.
Of course, the potential sale also is important for larger reasons related to the structure of the U.S. mobile market.
The sale is important to Clearwire for one simple reason: the sale proceeds could allow the firm to finish its nationwide network build without having to raise additional capital, which might mean taking on a new equity owner, which might especially complicate relations between Clearwire and majority owner Sprint Nextel.
But the sale could have strategic implications for other players as well. T-Mobile USA, for example, badly needs spectrum to support its own 4G efforts, and among the options could lease capacity from LightSquared, invest in Clearwire, or try to buy spectrum from Clearwire in the current process.
LightSquared obviously would like to have T-Mobile USA as an anchor customer, so the auction might remove T-Mobile USA from the prospect pool for LightSquared, should T-Mobile USA emerge as a winner.
Time Warner Cable, for its part, could emerge from the process as the only U.S. cable company with its own, fully-owned national wireless footprint, were it to win the auction.
Sprint Nextel, if it actually is bidding to win, could be signaling it wants to distance itself from the Clearwire relationship, at least in part.
Owning its own 4G spectrum would allow Sprint to better control both its costs, its timetable for upgrades and deployments, as well as its ability to package services. Full control of its own spectrum would allow Sprint to move immediately to build a 4G network using the Long Term Evolution air interface, a move that will at some point allow Sprint Nextel to leverage production volume of LTE handsets and devices.
But AT&T and Verizon historically have emerged from most spectrum auctions as key winners, and as the leaders in the U.S. market, arguably have the greatest strategic interest in protecting their lead, at least in part by locking up spectrum that could be used by a competitor.
Also, as the providers with the biggest customer bases, both Verizon and AT&T have the greatest need for spectrum.
Whether the spectrum sale winds up altering the strategic landscape remains to be seen. Clearwire wins by raising investment capital it dearly needs. Beyond that, the competitive landscape arguably changes least if either AT&T or Verizon gain the sold spectrum.
The biggest potential changes would occur if Sprint Nextel or T-Mobile USA were to win the auction, as either company would gain new strategic flexibility.
Were Sprint Nextel to win the spectrum, and build its own LTE network, it might be able to reduce its equity position in Clearwire to help pay for the new spectrum.
Right now, Sprint Nextel has majority control of Clearwire, but no management control. Sprint Nextel could wind down its equity position to the point that it retains favored wholesale access pricing, but no more.
A sale of a big chunk of Sprint Nextel equity in Clearwire also would create an opportunity for new players to enter the U.S. mobile business.
Any way one looks at the matter, there are opportunities not only for a boost to the mobile backhaul business, but to new competitors that might like to take a position in the U.S. mobile business.
Clearwire Corp. apparently is seeking to raise $2.5 billion to $5 billion in a wireless spectrum auction that has firms including AT&T, Verizon Wireless, Deutsche Telekom AG, Time Warner Cable Inc. and Sprint Nextel Corp. among the potential bidders, Bloomberg reports.
The bidding is in its second round and is being managed by Deutsche Bank AG, Bloomberg says. Clearwire is said to be offering spectrum up to 40 Mhz of bandwidth per market.
What cannot be determined now is what impact any spectrum sale would have on the wireless backhaul business. Assuming the spectrum is used to create a new 4G network, additional radios would be needed, as well as transmission sites. But it isn’t clear whether any new network could leverage some existing towers and backhaul facilities, instead of building entirely-new facilities.
The degree of sharing might depend on who wins the new spectrum. AT&T and Verizon would be able to leverage many backhaul and tower assets, while Sprint Nextel or T-Mobile USA arguably would be able to leverage fewer backhaul assets.
Of course, the potential sale also is important for larger reasons related to the structure of the U.S. mobile market.
The sale is important to Clearwire for one simple reason: the sale proceeds could allow the firm to finish its nationwide network build without having to raise additional capital, which might mean taking on a new equity owner, which might especially complicate relations between Clearwire and majority owner Sprint Nextel.
But the sale could have strategic implications for other players as well. T-Mobile USA, for example, badly needs spectrum to support its own 4G efforts, and among the options could lease capacity from LightSquared, invest in Clearwire, or try to buy spectrum from Clearwire in the current process.
LightSquared obviously would like to have T-Mobile USA as an anchor customer, so the auction might remove T-Mobile USA from the prospect pool for LightSquared, should T-Mobile USA emerge as a winner.
Time Warner Cable, for its part, could emerge from the process as the only U.S. cable company with its own, fully-owned national wireless footprint, were it to win the auction.
Sprint Nextel, if it actually is bidding to win, could be signaling it wants to distance itself from the Clearwire relationship, at least in part.
Owning its own 4G spectrum would allow Sprint to better control both its costs, its timetable for upgrades and deployments, as well as its ability to package services. Full control of its own spectrum would allow Sprint to move immediately to build a 4G network using the Long Term Evolution air interface, a move that will at some point allow Sprint Nextel to leverage production volume of LTE handsets and devices.
But AT&T and Verizon historically have emerged from most spectrum auctions as key winners, and as the leaders in the U.S. market, arguably have the greatest strategic interest in protecting their lead, at least in part by locking up spectrum that could be used by a competitor.
Also, as the providers with the biggest customer bases, both Verizon and AT&T have the greatest need for spectrum.
Whether the spectrum sale winds up altering the strategic landscape remains to be seen. Clearwire wins by raising investment capital it dearly needs. Beyond that, the competitive landscape arguably changes least if either AT&T or Verizon gain the sold spectrum.
The biggest potential changes would occur if Sprint Nextel or T-Mobile USA were to win the auction, as either company would gain new strategic flexibility.
Were Sprint Nextel to win the spectrum, and build its own LTE network, it might be able to reduce its equity position in Clearwire to help pay for the new spectrum.
Right now, Sprint Nextel has majority control of Clearwire, but no management control. Sprint Nextel could wind down its equity position to the point that it retains favored wholesale access pricing, but no more.
A sale of a big chunk of Sprint Nextel equity in Clearwire also would create an opportunity for new players to enter the U.S. mobile business.
Any way one looks at the matter, there are opportunities not only for a boost to the mobile backhaul business, but to new competitors that might like to take a position in the U.S. mobile business.
