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Comcast, Time Warner May Rescue Sprint's Xohm WiMax Service

New York (NY) - The recent financial troubles at Sprint put the rollout of its WiMax service Xohm in limbo. But someone’s problem is always the opportunity of someone else and it appears that a group of cable giants, hardware and Internet companies are willing to pony up billions of dollars that are required to make the most significant wireless broadband evolution since Wi-Fi a reality.

The Wall Street Journal (WSJ) reported earlier today that Comcast and Time Warner Cable are willing to invest $1 billion and $500 million into a new Wireless company that would be operated by Sprint Nextel and Clearwire, which have been in collaboration talks for some time.

While Sprint Nextel already has poured more than $577 million into Xohm and WiMax technology in 2007 alone, the company was aiming to raise an additional $3 billion to rollout the service on a broad basis. The Wall Street Journal said that, in addition to Comcast and Time Warner Cable, Intel may be willing to provide "about $1 billion", Google could bring in "hundreds of millions of dollars" and Bright House Networks between $100 and $200 million. Sprint previously said that a U.S. wide rollout would cost as much as $5 billion.

While the Journal points out that such a joint venture could increase the rivalry between cable providers and traditional telcos such as AT&T and Verizon, there is also Intel, which depends on available WiMax service to make the case for its next-generation Centrino platform (Echo Peak) and, most likely, second-gen Mobile Internet Devices (MIDs, Moorestown platform). The company heavily pushed its WiMax ideas at the WiMax World Forum in Chicago in September of last year, hoping that it could convince Xohm to provide a "30/30" model" - $30 for the hardware and $30 per month for the service.

Back then, there was doubt if this goal could be achieved, with Xohm being the only WiMax provider in the U.S. and the company’s intentions to sell the hardware at full price and offer "tiered" pricing for WiMax access.

According to the Wall Street Journal, Sprint CEO Dan Hesse is "pressing all parties to wrap up discussions in time for the wireless industry’s trade show next week in Las Vegas, so Sprint can have something to present to investors." The paper said that Hesse feels urgency as he wants to "get a head-start over competitors AT&T and Verizon Wireless on advanced wireless broadband services." It is unclear how Xohm’s strategy could change, if a group of other companies is on board. So far, the WSJ said that "cable companies would get equity in the business and would be able to purchase wholesale access to the network to offer their own high-speed wireless data and voice services to customers." We would expect Intel’s interest to be a stake in the company and active participation how the service will be offered and priced - to support their new products.

Back in September of 2007, Xohm’s president Barry West said that more than 10,000 WiMax sites were in preparation, more than 20,000 antennas were ordered and more than 8000 Sprint links were in deployment at the time and ready for a Q2 2008 launch. By the end of this year, the company planned to cover 22 metro areas in the U.S., including Austin, Baltimore, Chicago, Washington D.C., Boston, Houston, Los Angeles, San Diego, Pittsburgh, Detroit, St. Louis, Kansas City, Denver and Las Vegas. Xohm estimated that it could reach 48 million households, 4.5 million small businesses, 125 million mobile users and 130 million consumers through ad-hoc subscription services by 2010.

Current estimates by market research firm Maravedis put the WiMax subscriber base at 1.728 million users worldwide at the end of Q4 2007.