Intel's $600 Million Clearwire Investment Shows Its WiMax Commitment

Intel has made another huge investment in the next-generation wireless technology WiMax. Intel Capital, the chipmaker's venture capital investment arm, invested $600 million in financial funding to the wireless broadband company Clearwire Corp. to accelerate its development and deployment of mobile WiMax networks. The investment comes just a week after Intel announced plans for a chipset that has fixed and mobile WiMax capabilities and another one combining Wi-Fi and WiMax.

Intel Capital's contribution is part of a $900 million investment in Clearwire, with Motorola and its Motorola Ventures contributing an undisclosed amount. The companies plan to work together to spur adoption of mobile WiMax, which is based on the 802.16e standard and allows for an on-the-go Internet connection, such as while walking or riding in cars. Motorola says it will supply wireless broadband equipment for Clearwire's WiMax networks. Clearwire is a wireless broadband company founded by cellular phone entrepreneur Craig McCaw.

Clearwire at the same time is pulling its proposed initial public offering, in which it had hoped to raise as much as $400 million. The startup mostly operates in midsized markets, but it's considered the second-largest U.S. owner--behind Sprint--of spectrum on which WiMax operates.

As part of the transaction, Motorola will acquire Clearwire's subsidiary NextNet Wireless, a supplier of fixed and portable wireless broadband equipment. All three investors plan to contribute research and development funds for NextNet Wireless' pre-WiMax technologies--meaning those that haven't yet been approved by the WiMax Forum, which certifies products for interoperability.

Intel and Motorola are leading the charge for broad adoption of WiMax technology, which competes with other cellular-based data transmission standards. Motorola is testing its mobile WiMax equipment in Pakistan, where Wateen Telecom, the country's major service provider, in May hired Motorola to design and deploy a nationwide wireless broadband network based on WiMax. Intel last week said it will deliver by year's end a new chipset called Rosedale 2 that should make it easier to access WiMax from mobile computers. The company also expects to have an integrated fixed/mobile WiMax and Wi-Fi chipset, code-named Ofer-R, ready by 2008.The spectrum for WiMax deployments is scarce in the United States, but Clearwire could be one of the first service providers to offer it on a large scale since it owns part of the 2.5 GHz band, which has been designated for WiMax by the WiMax Forum.