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Thursday, August 17, 2006

WiMax Nation: DirecTV and EchoStar Need Help

Stocks: (DTV)(DISH)(INTC)(S)(MOT)

DirecTV and EchoStar have dropped out of the bidding for US radio-spectrum leaving open the issue of how they will offer wireless internet to subsribers. Since salellite TV only works well on the downlink, it is not a technology for two-way broadband.

Enter Clearwire, the start-up for building out WiMax, a company largely backed by a $900 million investment from Intel and Motorola.

Up until now the only large backer of WiMax to announce a deployment was Sprint/Nextel, which plans to use the technology instead of an alternative from Qualcomm for its 4G, broadband-ready phones.

WiMax has the advantage of working over spectrum that is free and not the expensive radio frequencies that are being auctioned by the FCC now. Total bids for the spectrum now have topped $10 billion. The large cell companies and cable firms are looking at the spectrum and a new and improved way to deliver fast portable phone connections.

The absense of DirecTV and EchoStar may make the bidding less vigorous, but it could also be a huge win for WiMax.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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