Cable Companies Discuss Funding Wireless Venture
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Comcast and Time Warner Cable, the two largest U.S. cable operators, are discussing a plan to fund a new wireless company that would be run by Sprint Nextel (NYSE: S) and Clearwire (NASDAQ: CLWR), people familiar with the discussions said on Tuesday.
Comcast is expected to contribute as much as $1 billion for the wireless venture, which would use emerging WiMAX technology for the nationwide venture, said the sources, who were familiar with the deal but not authorized to speak to the media about it.
WiMAX is a largely unproven technology that promises to support Internet access at speeds up to five times faster than traditional wireless networks, and can support a range of mobile and video applications.
WiMAX is a potential substitute for fixed-wire high-speed Internet that, for instance, could be offered across an entire metropolitan region.
Time Warner Cable is expected to put in about $500 million, the sources said.
These parties are trying to raise $3 billion for the joint venture. Intel Corp may contribute $1 billion, one of the sources said. Google (NASDAQ: GOOG) may be potential funding partner, the person said.
Bright House Networks, the sixth-largest U.S. cable provider, is also involved in the discussions and would provide between $100 million and $200 million for the venture, the person said.
But the talks are still in "very early stages," the sources said and a deal could fail to come to a conclusion.
Intel (NASDAQ: INTC), Sprint, Google and Clearwire officials declined to comment. Officials from Comcast and Time Warner Cable were not immediately available.
Sprint, the No. 3 U.S. mobile service, has said it aims to use WiMAX technology to provide wireless connections to consumer electronic devices such as music players and cameras as well as cell phones and laptops.
Sprint, which has been bleeding subscribers amid customer service problems, said recently that it was reviewing its WiMAX plans after it was widely criticized by shareholders for a commitment to spend $5 billion to build the high-speed wireless network based on WiMAX.
Both Sprint and Clearwire have said they were looking for outside funding for their WiMAX networks.
Sprint and Clearwire also said last month they were continuing to talk even after they announced late last year that they ditched an agreement to let customers roam between both companies' WiMAX networks.
Meanwhile, cable companies like Comcast are making a push to enter the wireless business to fend off competition from telecom giants such as Verizon Communications (NYSE: VZ) These companies have been snatching traditional cable customers by offering bundled services including high-speed Internet, mobile phone, landline and video.