Sprint put on its knight-in-shining-armor hat this morning, agreeing to pay $1.6 billion over the next few years to access Clearwire’s WiMax network. Without it, Clearwire would have had to choose between paying up on a $237 million interest payment or continuing to build out its LTE network — a necessity in terms of competition for both Clearwire and Sprint.

The deal consists of Sprint paying $926 million for unlimited 4G WiMax services between 2012 and 2013, reports MocoNews. In the meantime, Sprint is also pledging an advance of $350 million paid over a two-year period for Access to Clearwire’s forthcoming LTE capacity (as long as Clearwire hits certain benchmarks along the way). This will allow Clearwire to pay off its debt without derailing plans for its LTE network. That said, Sprint needs LTE just as desperately, so it only makes sense that Sprint would cover for its struggling partner.

The agreement allows for Sprint’s use of the WiMax network through 2015, though it’s only committed through 2013, at which point it will hopefully be transitioning to LTE. After 2013, the deal moves to a usage-based pricing model for access to the WiMax network. The deal also outlines long-term usage-based pricing models for Clearwire’s LTE services through 2012.

Sprint CEO Dan Hesse affirmed the relationship, issuing the following prepared statement:

These agreements are a result of the technical MOU we outlined during our third quarter results call and extend our relationship with Clearwire. It provides Sprint improved pricing, allows us to continue to provide WiMAX 4G services to our customers today and to new customers in the future and provides additional LTE capacity to help complement our Network Vision strategy and meet our customers’ growing data demands.

Clearwire’s $237 million interest payment was due today, so this deal couldn’t have come at a better time.

WiMax network operator Clearwire may not be long for this world if they don’t make the the right decision about a looming debt payment. Bloomberg reports that the company owes $237 million in the form of an interest payment due on Thursday, and the wrong choice could spell the end of the beleaguered network operator.

At least part of Clearwire’s financial woes can be attributed to their sudden devotion to rolling out an LTE network. I like to think Clearwire brass saw the writing on the wall when it came to WiMax’s competitiveness, but it’s opened up a pretty sizeable can of worms. Building the sort of network Clearwire wants will take gobs of capital (around $1 billion, actually) and they’re not far off.

The company has around $700 million cash in hand right now — it’s clearly more than enough to cover their bill should they decide to pay, but it could severely dent their LTE network expansion plans for the time being.

Things could get a little dicier should Clearwire fail to make the payment. If Clearwire spoils their relationship with their creditors, then the potential for future funding becomes much more questionable. On top of that, future instability also means that Sprint (and all the other companies that resell Clearwire’s WiMax service) could be left in a weaker position if the company is forced to reorganize.

One could argue that there really isn’t a “right” decision to be made here, though I personally think they’re better off making the payment and living to fight another day. Fortunately for Clearwire execs, they may have a bit more time to decide if they feel it’s worth the risk. According to Bloomberg, Clearwire can take advantage of a 30-day grace period, but a representative from the S&P has said they may downgrade the company’s credit rating to a D if they don’t pay up within five days.

Barring any sort of miracle (like Sprint buying them completely) things are looking pretty hairy for Clearwire. It looks like the sort of situation that won’t be resolved without the company getting screwed somehow, and all I can do is wait with bated breath to see what happens next.

Back in the heady days of the late 1990s, it seemed like everyone and their cousin was trying to break into the ISP business. NetZero once made a name for themselves thanks to their claims of free internet access, and now the company has struck a deal with Clearwire to start selling mobile broadband service under the NetZero name.

NetZero’s old gimmick was that you could poke around on the internet for as long as you wanted so long as you were okay with being bombarded by ads. The idea didn’t last terribly long — people managed to find ways to dodge the advertising — but the brand exists to this day as a purveyor of $9.99/month dial-up.

Sadly, I don’t think NetZero will be able to match that price for their mobile broadband offerings. There’s no word on pricing, but NetZero expects to have a complement of 4G USB modems and hotspots ready for next year.

It’s sort of puzzling to see Clearwire partner up with someone like NetZero, but all it takes is a quick look at what Clearwire has recently been through to understand why. To wit: Clearwire was lambasted by Sprint’s upper brass at a recent meeting, and they’re hurting for capital to build out an LTE network. Sure, Sprint made up for the gaffe by hinting at a long-term network sharing deal, but Clearwire is still in pretty dire straits.

Though the deal is sure to net Clearwire some much needed revenue, they’ll need to entice much bigger fish than NetZero if they want to survive. Still, at this point they may need to take whatever they can get: according to Bloomberg, Clearwire just posted a quarterly loss of $84.79 million.

It’s no secret that Clearwire is looking at rolling out an LTE network of their own here in the States, but a recently announced partnership could bring them some big support from overseas. The 4G internet provider has inked a deal with state-owned China Mobile to collaborate on the development of new TD-LTE devices.

TD-LTE is a network standard that China Mobile has been working to implement during the past few years. China Mobile’s forthcoming TD-LTE network runs on the 2.5 GHz frequency, which (what a coincidence!) matches up rather nicely with Clearwire’s own LTE licenses. Their partnership hinges on the development of multi-mode devices that could see use in either market.

For a company that’s rumored to be gobbled up soon, this partnership could be exactly what they need to stave off an acquisition. What Clearwire is really after is here is access: by helping to develop and expand the TD-LTE standard, they not only make it easier for OEMs to start working on devices usable by both companies, they also get in on the ground floor for potentially lucrative roaming agreements.

Of course, this all supposes that Clearwire can get the $600 million in funding necessary to start building out their TD-LTE network. Neither company has made mention of it, but if China Mobile were to pitch in a few bucks, it could generate some more state-side influence for China’s biggest wireless carrier.

Wow. Clearwire has just dropped a bit of a bombshell today, so I’ll spare you my usual theatrics: the operators of the nation’s first 4G network, having sensed the momentum that its LTE rival is gaining, has announced that they will add “LTE Advanced-ready” technology to its previously WiMax-only 4G service.

Of course Clearwire is quick to reassert their commitment to their existing WiMax network (and customers), but with Clearwire CTO Dr. John Saw referring to their execution of LTE as the “future of mobile broadband”, one can certainly smell the change in the air.

Their LTE rollout is supposed to center around major urban areas in their existing WiMax markets, in an effort to meet high demand for 4G service.

Don’t expect their LTE offerings to go live any time soon, though: they’re still waiting on some much-need funding before their implementation plans come to fruition. Hopefully, it happens sooner rather than later — with LTE Advanced potentially offering “peak download mobile speeds of at least 100 Mbps”, it should be able to satiate even the hungriest of data fiends whenever it lights up.

It’s definitely a big (and potentially very gainful) leap for Clearwire. They and partner company Sprint stand to pick up quite a bit of market share by offering more competitive 4G performance, all while flying under the banner of “the nation’s first 4G network.” The fact that the same 4G branding will continue for the foreseeable future actually strikes at the heart of a deeper question: does it really matter if LTE is better than WiMax? Most customers, as much as I love them, will see 4G and decline to press the issue any further; the rest of us network nerds will continue to argue about real v. advertised data speeds, while Mr. Joe On-the-go will benefit all the same.

[via Business Wire]

Sprint, Comcast, Time Warner Cable, and Bright House Networks (to name a few) continue to bet big on Clearwire’s WiMAX nationwide wireless network. The foursome have just pumped an additional $1.494 billion into Clearwire’s coffer, with another $50 million coming from Intel and $20 million from Eagle River Holdings. CHA-CHING.

More specifically, Sprint, which owns 51 percent of Clearwire, invested $1.176 billion, Comcast Corp. put in $196 million, Time Warner Cable Inc. dropped another $103 million, and Bright House Networks contributed a cool $19 million.

According to Christopher King, an analyst at Stifel Nicolaus, the new influx increased Clearwire’s cash stockpile to a whopping $1.8 billion and will help to mitigate the “funding gap” for its nationwide WiMAX network build-out to $3 billion. The new funds will purportedly allow Clearwire to hold off on raising more dough until at least the end of 2011.

[via Y! News]

Yesterday, Clearwire announced the expansion of its CLEAR 4G WiMAX Internet Service to 10 new markets, bringing the total number of markets served up to 14 with coverage for over 10 million users.

This is good news for all the WiMAX fanboys and girls out there, and especially for those who reside in the Lone Star state. The newly serviced areas include: Boise, Idaho; Bellingham, Wash.; and eight Texas markets, including Abilene, Amarillo, Corpus Christi, Killeen/Temple, Lubbock, Midland/Odessa, Waco and Wichita Falls.

According to Clearwire:

“CLEAR combines two of the most exciting technological advances of our generation ─ mobile communications and the Internet ─ in order to free our customers to take their rich home or office broadband experience with them anywhere around town or on the go,” said Mike Sievert, Chief Commercial Officer for Clearwire. “Our 4G WiMAX network provides a valuable new category of Internet service designed to make people’s lives more enjoyable and more productive by giving them access to the connections, information and resources that matter most, wherever they happen to be.”

As far as pricing is concerned:

CLEAR’s mobile and residential plans can be purchased by the day or by the month, with several no-service-contract options available. Home Internet service plans start at $25 per month; while mobile Internet plans start at $35 per month, or customers can purchase a convenient mobile day pass for $10. For a limited time, customers can also choose the Pick 1 Unlimited plan option; offering an unlimited home or mobile Internet for $22.50 for the first 3 months and $45 per month thereafter. Customers can find full details about pricing options, business plans and purchase the service online at www.clear.com, or by visiting numerous retail locations throughout these markets, or other authorized CLEAR dealers.

Like any new “life-altering” technology, WiMAX’s promise of ubiquitous Internet coverage sounds amazing in theory, but has yet to prove itself in practice. Sure, Clearwire has now expanded to a whopping 14 markets, but until the entire country is blanketed with “the stuff,” the jury is definitely still out on CLEAR’s ability to provide broadband speeds anywhere and at anytime.

I find it interesting that Comcast says they’ll be offering the service, when really they’re doing no such thing. They’re offering Clearwire’s service and splitting the bill. At any rate, if you have Clearwire in your area, chances are you’ll soon be able to get it through Comcast and bundle it with your TV and stuff for a better price. Portland will be the first to see the service, so you Oregonians can do your little victory dance. I’ll wait.

The service, called “Comcast High-Speed 2go Metro” because someone thought that was a good idea, will run you $73 a month, but call now and you can get it for $50, a savings of $23(RIP Billy Mays)! You can also throw down an extra $20 to get access to Sprint’s 3G network. Not my style, though. For a blogger, the internet is his leash, and if you’re carrying it around with you, you’re never off. That’s assuming we’re ever really even on.

Google just released fourth quarter earnings. Net Income was down a whopping 68 percent to $382 million (compared to $1.2 billion a year ago), primarily because of a $1 billion impairment charge related Google’s ownership stakes in AOL (for which it took a $726 million writedown) and Clearwire ($355 million writedown). We all know why the AOL stake is worth less than what Google paid for it (just look at Time Warner’s stock.) Instead of the $20 billion that Google’s five percent stake valued AOL at the time of its original investment, its new writedown now values AOL at $5.5 billion.

The Clearwire writedown isn’t surprising either. That is the Wimax company that had disaster written all over it.

Google is also allowing employees with underwater options to swap them for new ones. That is going to cost Google another estimated $460 million over the course of the new vesting period.

Investors will likely ignore the $1 billion charge because they tend to see these sorts of things as one-time events (even when they occur on a regular basis). The charge does not effect Google’s cash flow or cash position. On a non-GAAP basis, Google beat Wall Street estimates, with non-GAAP earnings of $5.10 a share, compared to consensus estimates of $4.96.

Total revenues (including what it pays out to AdSense publishers and other partners) came in at $5.7 billion for the quarter, up 18 percent. For the year, total revenues were $21.8 billion, up 31 percent. Operating income for the quarter (before the impairment charge) was $1.86 billion, up 29 percent. The company had $8.6 billion in cash at the end of the quarter

I am waiting for the earnings call to start. My notes from the conference call (Sergey and Larry are not on the call).

Eric Schmidt: We had strong search query growth year on year, kept lid on costs. 4th Q advertisers invetsted where ROI was the highest, online. took significant writedowns with AOL and Clearwire. Both deals made sense to us then and make sense to us now.

Last Q we said we were in uncharted territory. We don’t know how long this period will last, certainly prepared to get through it no problem.

At least 85% of employees have stock under water. A voluntary stock swap program. Total options expected to make up 3% of total shares outstanding. Employees who swap will discontinued products will low impact. We will continue to review that. [mentions Wiki search]. Will continue to focus on search and advertising. Wouldn’t it be nice if Google understood the meaning of your query? We are looking into things like that.

Android, already billions of page impressions through G1 phone. [Talks about enterprise, resellers].

Patrick Pichette (CFO):

We had another solid quarter,

gross revenue up 18% to $5.7B

Google.com up 22% to $3.8B
AdSense up 4% yoy to $1.7B (partially offset by cleanup efforts on Adsense for search
Paid click growth up 18% yoy, up 10% QoQ

UK soft because of currency, rest of EMEA did better, driven by Germany, France, Netherlands.

Also relative good experience in Brazil

TAC was $1.5B, 27% of advertising revenues
Cost of revenue $707M, up slightly because of data center costs.

Non-GAAP operating profit, $2.4B, 34.6% margin

Approximately 20,000 full time employees in Q4.

Impairment charges excluded from Non-GAAP results.

Capex $386M
Free cash flow, $1.8B, up 73 percent.

Jonathan Rosenberg:

We launched 330 search quality improvements, most significantly the size of our index. Worked hard on latency across the board. We tripled the number of queries that triggered Universal search across images, blogs, books. Adding more books and expanding our index are very important efforts.

More people are searching from mobile phones. Our objective is to make search from a mobile phone as fast and easy as possible.

Android phone has done very well. More phones in the works.

On the ad side, this was one of our strongest quarters for ad quality improvement. We will continue to get smarter about which queries should have ads to show users. We are now only back to where were back in 2008 from a coverage perspective.

beta launched keyword tool, helps advertisers find keywords on which they are not running ads. Most advertisers not maxing out daily budgets, so opportunity there. Launched Display Ad builder to create nice looking display ads straight from AdSense.

YouTube emerging as a key component of display strategy. People browsing for videos hundreds of millions of times a day.

Also launched 100 feature releases to Web-based apps, like chat in Gmail. Momentum is strong in apps, 1 million businesses, 10M users, 3M users in schools [Google apps stats].

Chrome has gotten great user momentum since launch.

Q&A:

Q: Why not more video ad

Eric: We have introduced 2 to 3 new formats for video advertising. All having some traction, have not found anything that drives revenues wildly. Virtually all the new device manufacturers have the ability to display Internet and Youtube content.

Jonathan: We have down quite a few experiments. Hard to match the right format with the right content. We have the in-video ads, also sponsored videos, contest platform, homepage sponsorship, click to buy. We have to come up with a standardized format. a significant constraint.

Q (Imran Khan): If you look at partner revenue growth rate, significantly underperforming Google.com growth rate. Why?

Patrick: On the mix issue, it is true the Adsense revenue was weaker. but Adsense for content had relatively strong quarter. In case of AdSense for search we did a lot of cleanup.

Omid Kordestan: On network, we did a number of quality measures to clean up. in terms of CPC we don’t break those out, but impact from Euro and Pound exchange rates. growth rates in emerging markets that have lower prices so downward pressure.

Jonathan: also consumers are doing more comparison shopping, so clicking through but not buying. or buying lower priced products.

Q: Capex was down significantly for the quarter. Is this a normalized level? Looking at the cost structure of Google, can you give us a sense of how flexible it is?

Patrick: I just want to reiterate we are investing. It just happens we are benefiting from economies of scale and greater efficiencies of our infrastructure. Moore’s law, better utilization. also big data centers are lumpy in the way they are invested. I’d be careful at looking at one quarter for purposes of forward modeling. We are a labor intensive business, so we have a lot of flexibility.

Q (Mark Mahaney): How much more opportunity is there for cost control? On CPC, can you help us think how deflationary CPC trends might be in an environment where lots of businesses might be going out of business.

Patrick: On the first Q, you ave to keep in mind the mindset of the company is to be a growth company. We are just managing responsibly given the environment.

Omid: If recession caused fewer purchases that would hurt us, but I don’t think you’d see CPC rates come down. CPC is really driven by users, not the number of advertisers coming in and out at any given time.

Q: Why is TAC down?

Patrick: The reason for TAC down QoQ is due to mix reasons mostly.

Q (Doug Anmuth): How has philosophy changed on distribution deals with Dell, etc. Why did you not continue to win those deals? And where is ad coverage going?

Omid: On the distribution deals, we are engaged in all of these discussions. We have a number of opportunities, from PC manufacturers to software toolbars that bundle our products like Chrome.

Jonathan: On coverage, we don’t know what the optimal mix is. depends on commercial versus noncommercial queries. We’d like to show fewer ads on queries that do not warrant them, and fewer, better ads on the ones that do.

Q: about advertising environment

Omid: Big customers especially are evaluating online marketing. they continue to take advantage of this, but maybe lower CPCs or size of campaign budgets.

Jonathan: Small and medium advertisers tend to cut their ad budgets less than large advertisers. We think that large advertisers do more across the board cut. Most advertisers do not max out their budgets.

Q: Can you give us an idea for strategy for display advertising (doubleclick, Youtube, etc)?

Omid: we are doing very well with Doubelclick integration. We are getting more inventory because doing a good job integrating. We optimize with AdSense only if they can’t get the higher price, so that is working out well. We feel this is a fragmented market ready for better measurements. Getting more traction here.

Jeez – busy enough day, FCC? Hot on the tails of the “white space” decision and approving Verizon’s buyout of Alltel, the FCC has cleared the merger of Sprint’s Xohm WiMax service with ClearWire – no doubt coming as a disappoint for some other carriers.

To recap the details announced back in May, Sprint will own 51% of the new company, which will take on the ClearWire name. ClearWire will have 27% ownership, while Google, Time Warner Cable, Brighthouse, Comcast, and Intel Capital will own the remaining 22%.

This is fairly huge news for 4G mobile broadband fans, as this merger essentially lays the necessary foundation for nationwide WiMax. If all goes well, ClearWire should be offering WiMax to half of the US’ population by 2010 – just as AT&T and Verizon are lighting up their competing 4G technology, LTE. When the battle for 4G technology king comes to a head, who will walk away the winner? The consumer, hopefully.

With the new company carrying on the ClearWire name, is the “Xohm” brand dead? I doubt it. When asked about the fate of the name, Xohm representatives have stated that “new management will be given the opportunity regarding how to position the Xohm name in the market”. While it’s not a household name by any means, Sprint has already done a fair amount of work establishing the brand and associating it with WiMax. I’d imagine that they’ll make use of it in the future, if only as a branding for WiMax dongles and other accessories.

The more I learn about the $3.2 billion deal announced earlier this week to salvage Clearwire’s and Sprint’s WiMax businesses by merging them together, the more I am convinced that someone got snookered. And that someone was Google CEO Eric Schmidt. Maybe he just can’t say “No” to visionary billionaires like Clearwire chairman Craig McCaw. Or maybe McCaw got Intel CEO Paul Otellini to lean on his buddy Schmidt. Otellini himself pledged $1 billion of Intel’s money towards the venture because he has made a big bet at Intel on selling WiMax chips. He also happens to sit on Google’s board. I don’t know if any of the above happened or not.

What I do know is that Google came reluctantly to the table and that for a long time the deal was being blocked internally at Google for some very good reasons. The main reason is that WiMax as Clearwire is deploying it is not a very good replacement for mobile broadband services. It is, above all, a fixed wireless solution. What it replaces is wired broadband services to homes and offices delivered through cable and DSL. That is how Clearwire is selling it today.

But to get Google (and Comcast and Time Warner Cable) to put up the cash, Clearwire had to promise it would build out a richer mobile broadband service as well. This is why Google invested—to bring the broadband Internet to mobile devices (some of them hopefully running the Android operating system). And it is why Comcast and Time Warner Cable invested. They don’t need a replacement for cable broadband to people’s homes. They need a wireless offering to fend off AT&T’s and Verizon’s incursion into their television market. (It’s all about who has the better bundle). Everyone is enthralled with this idea of WiMax as a disruptive wireless mobile broadband alternative. Even Neal Cavuto couldn’t stop waxing about the wonderful wireless future that this deal represents.

I wish that it were true. But here are a (more) few problems:

1. Clearwire and Sprint have not yet proven that WiMax is a viable business even for fixed wireless. Clearwire lost $727 million last year, nearly five times more than its total revenues. And it is projected to lose increasingly more over the next couple years during the expensive growth phase of its business. Moreover, the uptake of the service in the 50 or so cities where it is available has not been so great. That is because, unless you live in a rural area with no other broadband alternative, it is trying to solve a problem that doesn’t exist. At this point, most people in the U.S. can get broadband at their home just fine through cable or DSL.

2. WiMax hasn’t proven itself elsewhere either. Even in Korea, which has had WiMax for two years and is supposed to be a broadband paradise, consumers are not clamoring for WiMax. There are only about 150,000 WiMax subscribers in Korea, well below initial expectations.

3. Before you can turn Wimax into a mobile broadband service, you need mobile WiMax equipment. Cell phones, laptops, and other devices with WiMax chips in them are a long way away. Intel is ready to sell those chips, but device makers are not going to put them in their gadgets until enough consumers want them. And most consumers are going to wait for a WiMax network to show up that they can access both where they live and when they travel. So there’s a chicken and egg problem there.

4. Clearwire doesn’t know how to act like a mobile company. It doesn’t have a mobile business plan. It has a fixed wireless business plan. In order to make WiMax truly mobile, you need to build out a network dense enough to cover subscribers as they move from one place to another. That is simply not the case today, even in the markets where Clearwire operates.

5. Sprint is conflicted. To deal with roaming and coverage gaps, Clearwire would need to use Sprint’s 3G cellular network as a backup. That would require another chip in each device, which would make them more expensive than competing devices from AT&T or Verizon. Also, it would require Sprint opening up its 3G network to Clearwire and, by extension, Google. That’s not going to happen.

6. WiMax is not a global standard. Here in the U.S., WiMax is built on 2.5 GHz spectrum. Overseas, it is built on 3.5 GHz spectrum. That makes it harder for equipment manufacturers to achieve the scale they need to make money from WiMax devices and network equipment.

7. McCaw may be a visionary, but sometimes he doesn’t see so clearly. Yes, he built what is now AT&T Wireless and sold it for $11.5 billion. But after that he also was responsible for Teledesic and XO Communications—two massive failures that cost investors billions of dollars. Clearwire was about to join those latter two before Schmidt & Co. came to the rescue.

He tries to discuss the questionableness of the deal from a business standpoint despite the promises of WiMax as a technology. However, there’s clearly some frustration that Cavuto would rather talk about the future of mobile devices in general, and his daughter’s technology habits in particular, rather than analyze the viability of the deal.

It was announced yesterday that Intel is an investor in a WiMax partnership that Sprint Nextel and Clearwire are building in the United States. Intel invested $1 billion in the U.S. venture. Intel has also invested money with a group that is planning to build a WiMax network in Japan.

It appears as though Intel is spreading around a little seed money to help grow WiMax technology in already developed markets. It is banking that the wireless nature and fast download speeds of WiMax will be able to crack national markets that are already near the saturation point, when it comes to mobile phones and number of national Internet connections.

Sprint Nextel will control 51% of shares in the new company. Existing Clearwire shareholders will control 27% of shares. Contributors to the $3.2 billion investment will receive the remaining shares.

“The agreement enables us to get to market faster and reach a broader audience than we could have if we went alone,” Dan Hesse, Sprint Nextel’s chief executive officer, told analysts during a conference call Wednesday.

Clearwire will focus on building a mobile network based on WiMax technology. WiMax has faster download speeds and better indoors coverage than most current service provider’s technology. Some also see WiMax as a competitor to fixed-line broadband.

Clearwire currently uses WiMax to provide wireless Internet service in some parts of the United States. In 2007, Clearwire had a subscriber base of nearly 400,000 broadband customers. The restructured company has the goal to develop a network that has the potential to reach 120 million to 140 million people by the end of 2010.

Service providers like AT&T and Verizon Wireless aren’t planning to use WiMax technology, Instead, there are upgrading current networks and working on future technology called Long Term Evolution.

The boards of all companies have signed off on this deal and should be sealed in Q4. Clearwire’s current CEO Benjamin Wolff will continue to lead the pack while Sprint’s CTO Barry West will serve as president.

Google wants to usher in the world of wireless broadband so much that it is willing to spend vast sums to make it happen. It bid more than $4.6 billion in the recent FCC spectrum auctions (which it ended up not having to pay because it lost to Verizon), is backing the WiFi 2.0 initiative, and today it announced that it plunked down $500 million to shore up the new Clearwire-Sprint WiMax business.

Google is very clear about why it invested—to ensure that the resulting broadband network is as open as possible and accepts Android handsets and devices. It also sounds like Google may also be the default search engine on devices connected to the network.

This morning, it explains all of this on the Official Google Blog:

In addition to our $500 million contribution as part of the investment group, we will provide search and applications to the network’s users, and will work with Clearwire to offer additional services and applications. This will include jointly creating an open Internet protocol to work with mobile broadband devices (including Android-powered devices) and implementing other open network practices and policies.

We believe that the new network will provide wireless consumers with real choices for the software applications, content and handsets that they desire. Such freedom will mirror the openness principles underlying the Internet and enable users to get the most out of their wireless broadband experience. As we’ve supported open standards for spectrum and wireless handsets, we’re especially excited that Clearwire intends to build and maintain a network that will embrace important openness features. In particular, the network will: (1) expand advanced high speed wireless Internet access in the U.S., (2) allow consumers to utilize any lawful applications, content and devices without blocking, degrading or impairing Internet traffic and (3) engage in reasonable and competitively-neutral network management.

Google desperately wants access to future wireless broadband networks of all stripes and sizes,but it wants to avoid having to build and operate its own. Deals like this show that it is willing to pay to play. If Clearwire should ever go bust, though, that’s $500 million down the drain.

The deal to combine Sprint Nextel’s and Clearwire’s fledgling WiMax businesses that was rumored last March is finally expected to go through. Comcast and Intel are supposed to put in $1 billion each; Time Warner Cable, $550 million; Google, $500 million; and regional cable provider Bright House Networks, $100 million. The new company, which will be valued at $12 $14.5 billion, will be run by Clearwire and take its name.

As I said before, this is a disaster waiting to happen. Sprint and Clearwire need the deal to try to salvage the billions they’ve already sunk into their money-losing WiMax networks. But putting more cooks into the kitchen with different WiMax aspirations is not going to help. Google wants more wireless broadband alternatives for its planned mobile apps and advertising. Whereas the cable companies want a way to compete against mobile phone operators encroaching on their turf. As I wrote last March:

WiMax is a promising technology and these are early days. But even an extra $3 billion won’t be enough. Building out a nationwide WiMax network could cost as much as $8 billion to $12 billion. And there could be more technical hiccups.

I can see why Google might throw its hat into the ring here—anything to promote more broadband wireless networks. But Comcast and Time Warner Cable should stay away. The logic behind the investment seems to be that the cable companies could use the WiMax network to counter the moves by Verizon and AT&T into their turf (with TV service over phone lines). It is being suggested that the cable companies would be able to launch their own white-label mobile phone and high-speed Internet services over WiMax.

Here’s where that logic breaks down: Verizon and AT&T have a huge head start and customer lock-in when it comes to cell phone service. WiMax mobile phones would take decades to chip away at that even if they do offer faster data speeds. Today, Clearwire is only offering at-home phone service, not mobile. As for broadband Internet and home phone services, Comcast and Time Warner already compete effectively against the phone companies today with their alternative services over cable.

I hope that I’m wrong and that this new consortium will bring cheap WiMax to us all. Because the technology is very promising. Unfortunately, the business is not.

Speaking of Xohm, Sprint’s WiMAX initiative, rumors are swirling around Wall Street that Sprint will announce a partnership with Clearwire tomorrow, unifying their two disparate networks as one nationwide WiMAX network.

This is fantastic news for WiMAX fans and a step in the right direction if the technology is going to take on competitor LTE, or Long Term Evolution, a wireless standard backed by AT&T and Verizon, among others.

The partnership would also include Google, Comcast, Time Warner Cable and Intel and would likely take the form of a joint venture. It could be announced as early as tomorrow morning.

Sprint needs to trim some fat, but at the same time it needs to get its WiMAX network, which it’s already spent billions of dollars on, on its feet. Clearwire’s already in operation in many markets across the country, and by joining together both the networks and billing, it can do both.

According to the Wall Street Journal, “Comcast, the nation’s largest cable operator, would put up as much as $1 billion, while No. 2 Time Warner Cable would add $500 million” along with smaller cable operator Bright House Networks chipping in another $100 million to $200 million. Google’s another possible funding source as well.

It’s not surprising that Comcast and Time Warner want in on the action, as WiMax service would otherwise be competitive to their current broadband offerings. An area of concern, should this partnership materialize, might be whether or not Sprint’s relatively aggressive pricing for data services will mesh with Comcast and Time Warner’s penchant for making money hand over fist. Consumers could ultimately lose out should monthly WiMax service cost more thanks to too many cooks in the kitchen.

That concern might get diluted somewhat, though, as sources familiar with the deal told the Journal that the cable companies would be able to purchase wholesale access and resell it on their own. They’d also get equity stake in the entire project, though, so there’d be an incentive for the WiMax service to make money on the whole, which could result in higher service prices across the board versus if the venture was backed solely by Spint and Clearwire.