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Revived cableco alliance could save Xohm...

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Interest in Xohm

For Sprint, cableco interest in Xohm would have short term as well as strategic benefits. As well as boosting its potential position in the telecoms balance of power, and possibly putting new life into Pivot, the cable operators could provide the hard dollars needed to resurrect the eminently sensible idea of joining forces with Clearwire to create a united front and a network genuinely capable of challenging the majors' LTE and convergence plans.

Since the original joint venture deal foundered amid Sprint's decline, the departure of Forsee and the crisis of confidence in Xohm at the Sprint board, both sides have made it clear they are still interested in the alliance – but it needs external funding, with both Sprint and Clearwire being forced to cut back their own capex intentions because of market and competitive conditions.

Intel was widely rumored to be interested, but its history suggests that - while it has a strong motivation for keeping Xohm and Clearwire, and therefore the hopes for WiMAX in the US, alive – it will balk at investing more than a token few million dollars.

Google has also been a popular focus of speculation but, like Intel, prefers to be a kingmaker than a sugar daddy, lending marketing and software weight rather than hard cash.

By contrast, recent reports in the Wall Street Journal suggest the three cablecos are willing to invest a collective $1.6bn in the wireless venture, close to the $2bn Sprint is said to be targeting (Comcast is said to be the lead investor in the proposal, offering about $1bn, followed by Time Warner on $500m and privately held Bright House on $200m, with Intel and possibly Google also putting in smaller amounts).

For the cablecos, this would be only a modest capital commitment to gain an advanced national wireless network and a measure of control and ownership in that – better than just a wholesale deal, but stopping short of full investment in individual or shared new networks, something the operators have considered, but which has met with negative response from nervous shareholders.

The only one of the four original Sprint cable partners that may go it alone and build its own network is Cox, having won 22 licenses in the 700MHz auction. Time Warner and Comcast led a group called SpectrumCo in buying licenses in the AWS band in the 2006 auction, but have since seemed to go cold on using these for direct build-out, Comcast in particular focusing more on partnerships and access-agnostic services.

However, the cablecos have been getting increasingly vocal about the need to offer a quad play in competition with the telcos, with shareholders nervous that they miss this boat. In December Time Warner Cable CEO Glenn Britt said his company had "no intention of building the fifth cellular network," but said it would view partnerships and investments in 4G-related systems favorably, though only "as an offensive move".

Copyright © 2008, Wireless Watch

Wireless Watch is published by Rethink Research, a London-based IT publishing and consulting firm. This weekly newsletter delivers in-depth analysis and market research of mobile and wireless for business. Subscription details are here.

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