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News Corp and Clearwire ready to tie the knot?

Quad play marriage could rival Sprint and cable cos

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Sprint says it is still on track to announce its choice later this summer, with the stakes particularly high for Motorola since it will be losing, over time, its largest single customer, Nextel (for the legacy iDEN network and handsets), and needs to retain a portion of the huge Sprint capex plan.

Even should Motorola fail in the 2.5GHz space, which could be a reason for the company to have fallen back on the Clearwire deal, it still has high hopes from Sprint's expansion, as the cellco's joint venture with four major cable TV providers readies itself to launch its first commercial services this fall.

The four cablecos, Comcast, Time Warner Cable, Cox and Advance Newhouse, will add mobile content and communications to their customer bundles, powered by the Sprint Nextel system, and over time will develop a full quad play, harnessing their extensive content alliances and Sprint's broadband wireless build-out.

In this scenario, Motorola believes it can play a key role on the infrastructure side, the guarantee of the Clearwire contract, since Motorola's investment involved taking over the operator's own equipment arm, NextNet.

This may seem merely a consolation prize should the Sprint deal go elsewhere. But that balance would change if Clearwire does succeed in finalising a long rumored partnership with DirectTV, which would significantly accelerate its build-out plans, giving it an assured tier one customer, and an impatient one.

Rupert Murdoch's satellite TV interests round the world need to acquire the wherewithal to develop their own quad play, adding two-way communications and mobility to their mix, and the quickest route is likely to be a tie-up with the owner of an existing wireless system.

In Europe, News Corp arm Sky is trialing Qualcomm's MediaFLO mobile TV system, among other options, but in the US, MediaFLO is likely to be heavily tied to the telcos, while Sprint is in bed with the cable operators, leaving Clearwire an obvious choice.

DirecTV has filed an application to bid for its own spectrum in the forthcoming AWS auction, but this would be an expensive option and is likely to be a fallback choice should it fail to find an appropriate partner with a network already underway (another, more outside, candidate being mobile satellite company MSV, which has hybrid satellite radio spectrum and a $1bn build out plan).

Sources indicate that talks between DirecTV and Clearwire are now at an advanced stage - and may have been an incentive for Intel and Motorola to make their joint $900m injection earlier this month.

A DirecTV contract, likely to be worth about $2bn over two years, would be a huge financial boost for the nascent WiMAX industry and for Motorola in particular, would guarantee Clearwire's future, and be a significant and needed credibility boost for 802.16 technology.

It would also contribute to Intel's immediate goal of increasing usage of WiMAX client devices, a market in which Motorola will also hope to take a major share - both in mobile phones and set-top boxes.

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