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Clearwire is outsourcing its network to Ericsson, a further indication that its strategy will soon be entirely intertwined with that of major shareholder Sprint. Ericsson already manages Sprint's own cellular networks and is one of three suppliers to the cellco's Network Vision program to replace its current base stations with new equipment supporting multiple standards. Sprint CEO Dan Hesse recently acknowledged that, as many had speculated, his company was talking to Clearwire about using those base stations to host the WiMAX player's network too. That, in turn, would almost certainly mean a shift to LTE for Clearwire, and possibly a full merger with its biggest MVNO customer.

In the short term, the Ericsson deal is being presented as part of Clearwire's ongoing cost cutting program. Outsourcing networks is an increasingly popular move for major carriers, reducing costs and boosting efficiency, and Ericsson is now the largest operator in the world in terms of the number of subscribers it handles. Clearwire has been facing the prospect of a cash crisis as it has failed to gain new investors or sell excess spectrum, and is increasingly expected to throw its lot in entirely with Sprint. This could lead to a takeover, or at least to the two partners pooling their spectrum and infrastructure, probably adopting LTE for the 4G stage rather than migrating to future WiMAX generations. Clearwire already shares 40% of its cell sites with Sprint, 70% in large metros.

The companies did not provide financial terms of their seven-year deal and Clearwire spokeswoman Susan Johnston said the annual cost savings were not material, but it was the right time to bring in a third party for maintenance as the network achieved scale and stability. However, reduced operating expenses were seen by analysts as key, whatever the future deal with Sprint. "We think the Ericsson deal can further lower operating expenses in the third quarter that are already likely to drop in the second quarter," said Walter Piecyk, an analyst at BTIG Research, contributing to the bid to achieve EBITDA profitability by 2012. Clearwire retains ownership of its assets and will transfer about 700 staff to Ericsson, but denied there would be lay-offs.

Johnston insisted the decision was made independently of Sprint though she added: "Sprint has been very pleased with the partnership it had with Ericsson. That certainly influenced our decision."

There was some consternation over whether Ericsson could manage a WiMAX network, having been famously hostile to the technology. The choice of the Swedish supplier was seen as a further sign that Clearwire would migrate, over time, to LTE, but the WiMAX network will undoubtedly be in action for years to come. Ericsson said its managed services tools were suited to any wireless platform. It would, also, have been hard to find a managed services supplier with sufficient scale and experience that was specialized in WiMAX, given that Huawei was probably effectively barred from the project.

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