Sprint and Clearwire Team
for WiMAX Rollout

| July 23, 2007
| Competitive Intelligence Report
| Enterprise Mobility - U.S.

| Analysts: Kitty Weldon, Brian Washburn

Event Summary

On July 19th Sprint Nextel and Clearwire signed a letter of intent to pool their efforts in constructing the first nationwide mobile WiMAX network, and to operate as service partners. As a result, each company anticipates greater capital efficiency and lower network development and operating costs. The carriers plan to exchange spectrum to optimize their markets. Each will build out its markets for the nationwide network, and enable roaming between markets. Both carriers will share in product and service evolution, employ each other's infrastructure, and share branding, marketing, and distribution channels for the WiMAX network and services.

Analytical Summary

• Current Perspective: Positive on Sprint and Clearwire teaming up to construct a nationwide mobile WiMAX network, because sharing the load in construction and operations greatly increases both carriers’ ability to deploy nationally and draw customers to their joint 4G networks. Not only is there an opportunity for the carriers to accrue revenues by offering high-speed, cost-effective multi-media mobile services to businesses, but if Sprint uses 4G as an alternative to wireline broadband and leased lines, it could move access costs off third-party ILECs and onto equivalent WiMAX-powered services, with economics that are likely to be more favorable.

• Vendor Importance: High to Sprint because the carrier intends to split the WiMAX network buildout roughly 70%/30% initially with Clearwire, which should save roughly equivalent costs. The two service providers also intend to swap spectrum, to provide more capacity to each entity in the markets it will serve. The deal changes Clearwire from a prospective Sprint WiMAX competitor to a wholesale partner, as Clearwire agrees to use Sprint's towers, facilities, and long-haul services in building out its portion of the 4G WiMAX network.

• Market Impact: Moderate on the enterprise mobility market because a national 4G WiMAX fabric potentially competes against both wireline and wireless voice and data services, including the current generation of 3G being deployed now by all major wireless carriers. While Sprint and Verizon Wireless are still building out their CDMA infrastructures with the recent addition of Rev. A, WiMAX may ultimately prove faster and more cost-efficient for both consumer and business services. In addition, the two carriers could potentially provide an alternative both to wireline broadband and even leased line services. Sprint notes that it plans to offer WiMAX MVNO partnerships, which may also let third-party providers draw on the nationwide wireless access network as an alternative to wireline.

Recommended Competitor Actions

• If Sprint Nextel’s (and now Clearwire) WiMAX plans didn't have the attention of wireline incumbent local carriers before, those wireline carriers need to start paying attention now. In terms of messaging to business customers, the simple competitive response to queries about WiMAX is that the technology is still young and unproven, and while there has been plenty of noise, a nationwide network has yet to be built out.

• Providers of broadband wireline business services can describe WiMAX technology as being obsolete before it is even rolled out. They can compare the competing technology's 2-4 Mbps bandwidth against current generations of DSL offering up to 6 Mbps; cable, Verizon FiOS, and ADSL2+ technologies all are capable of offering much higher speeds. Against leased lines, they can describe WiMAX as having yet to prove it can provide any meaningful service guarantees.

• Providers of leased line wireline services can say that WiMAX is unsuitable for business. They can say that when it comes to wireless technologies, anything other than professionally installed point-to-point microwave has failed to offer meaningful service guarantees, and WiMAX will have the same fate because no one can provide guarantees against the unknowns that can happen in the access network.

• Competitive wireless operators (AT&T, Verizon Wireless and T-Mobile) need to make sure their own 4G strategies and upgrade plans are in place, perhaps sooner than they would have otherwise wanted, to meet or beat Sprint and Clearwire’s competitive threat. With planned WiMAX services to be deployed nationally in 2008, there already needs to be competitive plans for significant coverage with the next generation of cellular services, especially if Sprint can use the inherent cost-efficiencies of WiMAX to offer much faster, less expensive mobile access.

Recommended End User / Customer Actions

• Sprint Nextel intends to turn on its initial WiMAX markets — among them Chicago, IL; Baltimore, MD; and Washington, D.C. — in late 2007 or early 2008. Since Sprint Nextel and Clearwire do not yet have their new WiMAX deployment plans up and running, and they have not yet announced whether business-class services will be available at launch or at a later date, customers cannot take any action based on the carrier partnership at this time.

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