Verizon Attempts Clearwire Spectrum Coup

by Matt Klassen on April 17, 2013

In yet another unfolding chapter of the ongoing Sprint/Clearwire saga, Verizon is the latest wireless player to join this increasingly complex dance, assuming the role Dish Network formerly occupied in vying with Sprint for Clearwire’s last remaining asset: spectrum.

Citing sources close to the matter, shortly after news broke that Dish Network had made a bid for Sprint Nextel the Wall Street Journal reported that Verizon had offered Clearwire $1.5 billion for the latter’s spectrum leases; America’s largest wireless provider clearly looking to capitalize on the chaos surrounding former suitors Sprint and Dish Network to quietly pull off an important spectrum coup.

While there’s no question that such a push further obfuscates the already complicated intertwined relationships of Sprint/Clearwire/Dish Network and of course forgotten Japanese Sprint suitor Softbank, it just serves as yet one more example of the value of spectrum; that companies like Verizon will do whatever they can, utilizing whatever sort of chaos they can, to get their hands on the mobile market’s greatest natural resource.

Since the fall of Clearwire’s inglorious WiMax project, its own 4G LTE alternative technology, Sprint, Clearwire’s former WiMax partner and single largest shareholder, has coveted Clearwire’s spectrum, reportedly making a deal with Clearwire in December to purchase the remaining shares in the company. Then, as I explained yesterday, things became slightly more complicated, as Dish Network tendered its own unsolicited bid for Clearwire; a deal that never came to fruition given Dish Network’s recent attempt to acquire Sprint itself.

So while Sprint still covets Clearwire’s spectrum to assist in the former’s much needed 4G LTE rollout, Verizon has thrown yet one more wrench in the gears of this increasingly complex situation. While Verizon’s bid stands substantially less than Sprint’s original $2.2. billion for Clearwire’s remaining shares, the fact of the matter is that Verizon doesn’t want Clearwire, it doesn’t even want the spectrum Clearwire owns, it simply wants control of Clearwire’s current spectrum leases, that is the spectrum Clearwire leases from third parties, and its willing to pay a hefty $1.5 billion for it.

Verizon’s attempted spectrum coup, and Sprint’s initial interest in Clearwire for that matter, both underscore the growing need among carriers for wireless spectrum to handle the exponential growth in wireless data traffic on their beleaguered networks. In fact, most analysts assume that the current spectrum available, if used in the way it’s currently being utilized, will only offer a temporary patchwork solution to these ongoing spectrum woes, the continued increase in data traffic threatening to cripple networks within a few years.

What’s even more interesting, however, is that of the proposed deals we’ve seen this week, I would wager that whichever takeover bid Sprint shareholders ultimately approve will have an easier time finding regulatory approval than Verizon’s comparatively diminutive spectrum grab, simply for the fact that spectrum has become such a valuable commodity. Regulators have shown a propensity towards allowing new players, like Dish Network for instance, to enter the wireless market, and a marked resistance against allowing established incumbents to further fill their spectrum coffers.

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Written by: Matt Klassen. Follow by: RSS, Twitter, Facebook, or YouTube.

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