Sprint’s $1 Billion Infusion in Clearwire Demonstrates WiMax Commitment

After having agreed to new wireless wholesale terms, Sprint and Clearwire have resolved their differences resulting in Sprint injecting $1 billion into Clearwire during this year and next year. After speculations that Sprint may ditch WiMax to use the rival LTE 4G protocol instead, the cash infusion demonstrates the carrier’s commitment into Clearwire’s 4G WiMax network and should help Clearwire expand 4G into additional markets in the U.S.

Since Sprint had launched the HTC EVO 4G Android phone last year, a number of new players have entered the 4G market with competing standards, including Verizon with LTE, T-Mobile USA with HSPA+, and AT&T with HSPA+ though AT&T says it will switch over to LTE later this year.

According to Light Reading, the agreement will help Sprint work with Clearwire to “allow wholesale pricing for Sprint devices that operate on both Sprint’s 3G network and Clearwire’s 4G WiMax network.”

Cash-strapped Clearwire had been struggling recently prior to Sprint’s additional $1 billion investment. The company had let go of some key executives as well as forego its retail operations; as a result, Clearwire will now be focusing on the wholesale business and the WiMax network.

However, an additional investment by Sprint doesn’t necessarily limit Sprint from other agreements or from other network sharing strategies.

Michael Nelson, analyst at Mizuho Securities USA Inc. , expects that further network sharing agreements might still be on the cards for Sprint. “We continue to expect Sprint to enter into network sharing deals with Clearwire and LightSquared, which should offset some of the cost associated with Sprint’s Network Vision plan,” he writes in a research note Tuesday.

LightSquared operates a similar business plan to Clearwire, but the company is more focused on LTE rather than Clearwire’s dedication to WiMax for 4G.

Sprint so far has not announced the final decisions for its Network Vision plan on whether LTE adoption is out of the question. While the carrier was the first to launch 4G in the U.S., heralding the HTC EVO 4G as the world’s first Android smartphone for 4G, its network now trails rivals in terms of speeds. Compared to Verizon’s LTE network, Sprint’s WiMax promises 3-6 Mbps for download speeds instead of Verizon’s 6-12 Mbps. A move to LTE or increased WiMax network performance would help Sprint be competitive in its 4G plans.