Comcast and Time Warner Cable, the two biggest U.S. cable companies, are in talks to fund a wireless joint venture that would be run by Sprint Nextel and Clearwire, the Wall Street Journal reports ($).
According to the plan, Comcast (CMCSA) would kick in $1 billion, Time Warner Cable (TWC) would contribute $500 million, and Bright House, Google (GOOG), and Intel (INTC) could also fund the JV. The network would operate using a nascent wireless technology called WiMax, which Sprint (S) has been trying to roll out and Clearwire (CLWR) already sells.
Why bother? The cable companies’ main rivals — AT&T (T) and Verizon (VZ) — are moving into their territory by offering digital TV service over new, fibre-optic networks. They both also have nationwide wireless networks, which Comcast and Time Warner don’t. Cable companies haven’t needed to offer wireless yet, but they might eventually. So by partnering with Sprint, they could sell wireless phone and Internet access to match whatever the telcos might offer.
Sound familiar? Sprint and the cable companies have worked together before: In 2006, they teamed up to buy a bunch of wireless spectrum together in a FCC auction. They also have another joint venture, called Pivot, which was supposed to allow the cable companies to add wireless to their product line. It was a flop.
So why make a deal now? Because AT&T and Verizon just spent billions of dollars on spectrum in the FCC’s latest wireless auction, which they’ll use in a few years to power faster, next-gen mobile networks. Both telcos will use a different wireless technology than WiMax to power their networks, setting up a potential format war. So Sprint and Clearwire — and the cable companies — need to act fast to establish a lead.
The deal could get done quickly: The Journal says new Sprint CEO Dan Hesse wants to have something to show off during next week’s big wireless trade show in Las Vegas.