When Sprint announced it would stop using Clearwire's wholesale WiMAX service in favor of its own LTE network last month, Clearwire's stock tanked, and for good reason. Sprint was its largest customer, and the loss of that revenue could have wiped out Clearwire's primary source of income.
Clearwire needed a savior, and it appears that savior has come. The company said today it has signed a five-year deal with UnitedOnline to provide wholesale WiMAX services for its NetZero brand beginning next year.
"NetZero is well known for extending the availability of Internet services to new customer segments, and we are pleased to help them expand their product lineup into the mobile broadband market," said Don Stroberg, Clearwire's senior vice president of strategic partnerships and wholesale.
Financial terms of the deal were not announced, but investors appeared optimistic, sending Clearwire's stock up more than 7 percent after news broke this morning. Clearwire will report its third-quarter earnings later this afternoon.
Sales from NetZero could help offset the loss of revenue from Sprint. Clearwire also plans to sell LTE capacity to Sprint, but it has yet to come up with the $600 million it needs to build the network and bring that deal to fruition.
UnitedOnline initially will offer the new NetZero service on two data-only devices – a USB modem and a personal Wi-Fi hotspot. No further details about pricing or manufacturers were announced. The company has not provided a specific launch date for the service, saying only it would become available early next year.
"We believe this deal with Clearwire will give us the ability for the first time to bring affordably priced, 4G high-speed mobile broadband service with 6 Mbps to 10 Mbps speed to the masses," UnitedOnline President and CEO Mark Goldston said.
UnitedOnline's NetZero brand dates back to the dial-up days. NetZero first came to market in 1998 with free dial-up Internet access and began offering $10 per month premium dial-up services in 2001. In 2003, the company came out with NetZero Hi-Speed, which it claims was the fastest dial-up service offered at the time. UnitedOnline's communications division currently offers free and low-cost dial-up Internet service and DSL broadband service through its NetZero and Juno brands.
Clearwire needed a savior, and it appears that savior has come. The company will provide wholesale WiMAX services for UnitedOnline's NetZero brand beginning next year.