March 26, 2008: 4:53 PM EDT
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A ray of hope for WiMax

Faltering effort to build new wireless network gets a boost from cable companies.

By Scott Moritz, writer

NEW YORK (Fortune) -- WiMax may not be dead after all.

Sprint and Clearwire may have found more partners for their broadband wireless joint venture as Comcast and Time Warner Cable are in talks to chip in $1.5 billion, according to The Wall Street Journal. The cable companies would be teaming with Intel and possibly Google in a new venture to build a fast wireless national network using WiMax technology.

This alignment of tech stars would be a giant leap forward for the faltering WiMax effort. To date, the fate of this next generation mobile Internet access had been held in Sprint's (S, Fortune 500) slightly distracted hands and also controlled by the financially challenged Clearwire (CLWR) outfit founded by Craig McCaw. For its part, Intel (INTC, Fortune 500) is willing to invest $1 billion to promote WiMax so it can get some return on its investment in WiMax chip development. WiMax is a potentially faster, more broadly available and mobile version of WiFi, the hot-spot technology favored by coffee shops and a handful of municipalities.

Sprint and Clearwire have been shopping the WiMax joint venture around in recent months to attract bigger partners with deep pockets. The plan requires loads of financing - Sprint and Clearwire will need several billion dollars to fully fund the construction of a new network. WiMax is a good year or two ahead of a competing technology known as long-term evolution or LTE that AT&T (T, Fortune 500) and Verizon (VZ, Fortune 500) have chosen as the upgrade path. But with WiMax riding the Sprint/Clearwire horse, the odds weren't looking favorable. The move by Comcast (CMCSA) and Time Warner Cable (TWC), a unit of Time Warner, which owns Fortune, would add significant clout to the WiMax camp. Comcast did not return a call seeking comment and Time Warner Cable declined to comment.

The cable companies, under pressure in their core video markets from phone and satellite shops, have eyed wireless as a new market and potential weapon in the bundled services battles. But WiMax isn't the only option. Atlanta cable giant Cox is exploring the construction of its own wireless network and was a winner of airwave licenses in the recent federal auction. Cox declined to comment.

WiMax is key to Clearwire and Sprint's proposed venture, and it represents a major growth market for Intel, considering the thousands or millions of future devices needing WiMax chips. But analysts say WiMax is just one of a number of options for cable companies and hardly essential for their future success.

So WiMax may not be dead, but its also not exactly money in the bank To top of page