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April 19, 2011

Sprint to Pay Clearwire $1 Billion Under New Pricing Deal

Clearwire and its majority owner Sprint ended a long-running dispute on Tuesday by agreeing to a new wholesale pricing deal that will enable the carrier to continue to tap into Clearwire's fourth-generation network.

The third largest U.S. wireless provider will pay Clearwire a minimum of $1 billion over the next two years to rent space on its high-speed network. The two companies entered arbitration in November after initial negotiations failed to result in an agreement.  

As part of the deal, Sprint will pay Clearwire $300 million this year and $550 million in 2012. The carrier also agreed to pre-pay $175 million for additional 4G use over the next two years and beyond. The agreement represents a minimum commitment by Sprint. The company will be forced to add to the total if data usage on the network continues to expand, according to the Wall Street Journal.

For Clearwire, the deal ends a long drain in revenue and enables the company to move forward with the roll out of its 4G network across the entire country. As a 54 percent stakeholder in Clearwire, Sprint also had extra motivation to come to an agreement.

“This provides us with the capital to operate efficiently over the next couple of years,” John Stanton, Clearwire’s interim Chief Executive Officer, told the Journal. “It allows us to plan for our expansion.”

The two companies also agreed to a wholesale pricing deal that takes into account devices that run on both Sprint's 3G network and Clearwire's 4G WiMax network. The deal relies on a usage based pricing model and provides Sprint with volume discounts.

In addition, the agreement enables both companies to resell the one another's 3G and 4G networks to third parties.

“We are pleased to reach this wholesale pricing agreement with Clearwire,” Dan Hesse, Sprint CEO, noted in a statement. ”We look forward to working with them under this new agreement to provide an expanded offering of 4G capabilities and solutions for Sprint customers.”

Beecher Tuttle is a MobilityTechzone contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.

Edited by Jennifer Russell

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