Comcast, Time Warner eyeing WiMax network

Chicago Tribune

CHICAGO — Cable television’s escalating battle with phone companies for residential customers may push Comcast Corp. and Time Warner Cable Inc. into the wireless broadband business, industry analysts said.

“Wireless is the hottest part of telecom and, if they’re going to compete, cable cannot go forward without it,” said Jeff Kagan, an Atlanta-based telecom industry analyst.

Comcast and other cable companies are talking with Sprint Nextel Corp. and Clearwire Corp. about contributing cash to fund a nationwide WiMax wireless high-speed data service, The Wall Street Journal and others reported. Discussions call for Comcast to contribute about $1 billion while Time Warner would put up $500 million.

A source close to the discussions said that chipmaker Intel Corp., Internet search engine Google Inc. and some smaller cable operators would also contribute money to the project while Clearwire and Sprint would contribute spectrum and operate the network, which would be run by a new, separate company. The talks seek to raise about $3 billion.

The companies declined comment.

If a deal is made, it could solve a major problem for cable companies that see Verizon Communications Inc. and AT T Inc. eating more deeply into cable’s core business as the phone giants become more aggressive in rolling out video products on their upgraded networks.

Besides entering new markets, the phone companies are also becoming more aggressive on the regulatory front. On Wednesday, Verizon petitioned the Federal Communications Commission to adopt new rules that would make it easier for a consumer to change video services. Verizon argued that it should be as simple to change video services as it is to change phone carriers.

While creating a national WiMax network may be appealing, it isn’t easy.

Last summer Sprint and Clearwire agreed to join together in operating a national WiMax network, but that agreement fell apart in the autumn due to insufficient funds. Sprint’s cash flow problems related to declines in its cell phone business forced its chief executive to resign last year.