DirecTV-Clearwire Deal Envisioned
Industry analysts and other observers view a Clearwire- News Corp. link as the likeliest outcome when the firm headed by Rupert Murdoch unveils details of a proposed $1 billion investment in high-speed Internet through DirecTV. “If you think that there are 2 possible suitors out there, at least in the U.S., Clearwire would be the one that would make the most sense,” said Peter Jarich, with Current Analysis: “Sprint is probably ruled out by the work they've done with the cable companies.”
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EchoStar and DirecTV are rumored to be eyeing 2.5 GHz spectrum, but industry sources said there have been no reports of either buying licenses. “It probably makes more sense for them to do a deal with an existing operator or buy an existing operator - doing something like what the cable companies did with Sprint,” said a source.
Other possibilities loom, including a tie with Mobile Satellite Ventures (CD Jan 10 p2) or an MVNO with a major wireless carrier. Nationally, Sprint Nextel and Clearwire are the 2 largest holders of 2.5 GHz spectrum. Sprint has the largest holdings, but also a problem in the carrier signed a joint venture agreement with major cable operators in the fall, and satellite TV is cable’s biggest competitor. But Clearwire’s holdings are mainly in smaller markets - those most targeted by satellite TV. Clearwire’s main claim to fame is that wireless pioneer Craig McCaw heads the firm.
Clearwire wouldn’t need a national footprint to work out an agreement with Murdoch, Jarich said. “If they're in rural markets they don’t really need to have national coverage,” he said: “[DirecTV] could pick those markets where Clearwire has spectrum.” Other possibilities exist, but would take much longer to bring to market than 2.5 GHZ, he said. 700 MHz, for example, won’t be on line for years, with Congressional action still needed. Use of MSV spectrum must still clear the FCC.
John Mansell, analyst with Kagan Consulting, agreed Clearwire, with its smaller-market focus, would make the most sense for a DirecTV partnership. “Obviously, the cable operators have an alliance with Sprint,” Mansell said: “That leaves Clearwire as the next major player.” Experts disagree on how much spectrum a firm like Clearwire needs to provide DirecTV a robust wireless network, he said. At last summer’s Wireless Communications Assn. national conference in D.C., officials from Nextel and Clearwire disagreed on that issue. Clearwire indicated it needed only 30-40 MHz in any market, compared with the 200 MHz Sprint said it needed. “It’s a tough question to answer,” he said: “It’s controversial issue as to how much spectrum is needed in any given area.”
“Clearwire would appear to be the best choice DirecTV has, if they want to go with 2.5 GHZ and get something rolled out quickly,” an industry source said. “Nobody is hearing anything definitive, but Clearwire makes a lot of sense.”