Sprint-Clearwire: Sprint’s SVP Atish Gude: “We Know We Are The Pioneers” Of The Mobile Internet
By Tricia Duryee - Wed 07 May 2008 12:50 PM PST
After speaking to Clearwire’s Ben Wolff, I also interviewed Sprint’s (NYSE: S) Atish Gude, the SVP of Sprint’s Xohm mobile broadband operations, about the pending deal that would create a nationwide WiMax network built and operated by Clearwire (NSDQ: CLWR). Once the deal is final, Sprint’s WiMax unit will be consolidated into a new company, which will be called Clearwire and operated out of Kirkland, Wash. with a major office remaining in Virginia. Gude, who has been a big promoter of the WiMax technology since Sprint first announced its interest in 2006, said he couldn’t be more excited. “We’ve been working on this thing for a long time. We’ve had a couple of starts and stops with Clearwire, but the two organizations share a very common vision. Many of their people came from organizations that were linked to Sprint or Nextel in the past, so culturally we are similar. We do share the same vision, and we know we are pioneers and together we will pioneer the new phase of the mobile internet faster than anyone else. For that reason, I’m thrilled to have gotten to this point and look forward to the future.” From the interview:
Were you involved in getting the deal closed? Can you share how difficult it was to accomplish?: Gude: “We had a deal team, so I was personally involved on the periphery, by supplying content to the negotiation. But, I can tell you, if your question is how difficult was this to close – I don’t know the level of difficulty in terms of agreement and disagreement, but I can tell you that there are a lot of great nuances that affords each of the partners a great deal of flexibility, as well as leveraging each of the partner’s benefits, in terms of distribution channels, and unique strengths. You know from our relationships in the past that we had with the cable companies through Pivot, we absolutely wanted to do this right and working on a lot of the finer details to make sure we understood operationally the benefits that were afforded by the partners. That’s what took the most time.” Lots more after the jump…
Can you give me an idea of how fast the two companies will move together now versus being two separate, competing entities?: Gude: “Specifically at this moment in time, ... Clearwire and Xohm do not actually compete because Xohm has not launched its commercial network yet. We are in the process to build the commercial network, and we’ll have to go do the things we would have to do otherwise to go build a network, but the deal in itself has not yet been approved by the regulatory bodies so we have restrictions on how much we can work together. From previous mergers, there are things we can do from the planning perspective, but we can’t act as one company until approval. We’ll do a lot of planning as is afforded to us, and once that process is finished—we estimate in the third or fourth quarter this year—we’ll start behaving as one company.”
Assuming that the deal closes, you obviously thought it was advantageous to work together, rather than to build out two separate networks?: Gude: “Absolutely. Being in the network business, essentially means that network companies have to put out a lot of capital before you get subscribers. There’s inherent risk in doing that. Clearwire has done a good job in getting started, and Sprint’s Xohm network faces the kind of situation. We’ll have to put capital in the ground in order to start earning revenue. Putting our strengths and assets together, starting with the spectrum, because each of us had our respective parts of the country, there was some overlap but it was not significant. ... being able to put our spectrum and assets together, leveraging the towers, the leases, and the core backbone of Sprint, allows the collective business to move much faster and much less interrupted now that we have a good level of funding behind this thing.”
Do you agree with what Sprint’s CEO Dan Hesse said on the call earlier today—that you will now be two years ahead of the competition?: Gude: “I absolutely believe that, but let me add to that my own context from my own perspective. People don’t win in business just by building technology, you have to effectively translate that technology into to a business model. In our case today, our business model is things that we are working on, and everything that is beyond deploying the technology, like getting a large ecosystem of chipset providers who can embed them into consumer electronics, and having a seamless activation and provisioning process that doesn’t have a great deal of subsidies or no subsidies. These are all parts of the business model. In the two years that we give ourselves (and it could be longer than that but we will afford ourselves two years conservatively), we will have time to be sure that what we sell in the marketplace will drive the adoption curve. Sometimes that takes time, but having no one in place while we work out the kinks, I think is tremendously in our favor....Already, customers know, Wi-Fi, cellular, and Internet access, they buy consumer electronic devices. There’s a lot of experiences consumers have, but putting it all together in one package—there’s some new stuff there, but all of our research says consumers will absolutely buy this.”
Were you previously working with Google?: Gude: “Yes, in our original announcement in August 2006 when we first stated that WiMax will be our technology choice for a new business model, we partnered with Google (NSDQ: GOOG) to have them provide us search on our platform, and said that we would utilize email, and other applications like email and calendar. We already had a relationship with Google, what this does allows us to strengthen our relationship with Google, in terms of working with them on open standards, so we think it’s a natural extension.”
It seems like Google is getting a rich deal out of this both on the 4G and the 3G sides of the business. It almost seems like they are creating a Google world, which arguably may not be open, what do you think?: Gude: “That’s a great question. I would tell you that Google is a very strong powerful company that has built an extremely successful business sticking to knitting on its business model. All companies try to stretch their knitting to grow into new markets, but they’ve been a strong supporter of the open business model, and I can’t tell what Google’s future is, but they’ve built a tremendous business on the theme of open, and I don’t see Google getting away from that because not only are they strong proponents, but their business model is very successful on being open.”
How will it work with multiple vendors—Clearwire, Sprint and a cable operator—all offering the same service on the same network in the same territory?: Gude: “I would say that we are leveraging the best distribution channels that are afforded to us by our partners. Cable is effective different than the distribution means cellular carriers have put together, which uses the Web, their own stores and big-box stores. Cable is in retail but they are extremely good at bundling packages and creating a more seamless experience on a home and away service...The new Clearwire will build a retail organization that develops partnerships that really push the innovation in application and devices that creates bigger choice among customers. There will be an element that’s competing but it’s the customer’s choice if they want to buy into a cable bundle, a Sprint bundle, or the interesting new products and services that Clearwire will put together. But the intention of this deal coming together was to leverage the best of each partner, and and give each other the flexibility to drive the market. We don’t have a proven formula yet.”
What do you think of the progress being made by LTE? Are you surprised?: Gude: “No, not really. I haven’t been surprised because LTE was really started from the GSM camps...Only a few carriers are raising their hands, but in many respects, LTE will be long-term evolution of what? The voice platforms that they have today. There’s a lot of carriers who haven’t made up their mind yet that are saying ‘don’t just pick me a technology, pick the right business model that drives a new business.’ What WiMax really is, is the business model of the open Internet. That’s’ the business model we are trying to build.”
Posted in: Companies, Operators, SprintNextel, Money, VC M&A, Mergers & Acquisitions, Technologies, 3G Etc, WiMax
Tags: atish gude, clearwire,






