Wall St. said WiMax was dead. Sprint (NYSE: S) which was going to build a $5 billion network for its broadband wireless network did not have the capital. Neither did start-up Clearwire (NASDAQ: CLWR). But, a number of companies with skin in the game are putting up $12 billion to take WiMax to Main Street.

According to The Wall Street Journal Sprint has agreed to merge its wireless broadband unit with Clearwire. The new company has raised a total of $3.2 billion in outside financing from several heavyweights — $1.05 billion from cable provider Comcast, $1 billion from Intel, $550 million from Time Warner Cable and $500 million from Internet giant Google.

The deal allows cable operators like Comcast (CMCSA) and Time Warner Cable (TWX) who are seeing some of their broadband customers go to AT&T (T) and Verizon (VZ) a bit of revenge. It allows Google (GOOG), which wants into broadband to market its wreless applications and online advertising, a chance to be in on the ground floor of a 4G wireless deployment. It will help the search company move off the PC and onto portable devices.

The partnership rescues Sprint and Clearwire from the dustbin and could give the major cellular customer a fit.

Deutsche Telecom (DT), which was rumored to be buying Sprint, was left out in the cold along with its No.4 US wireless operation T-Mobile, which will now quietly fall apart.

The rumor that NexTel would be spun out of Sprint also turned to dust.

Douglas A. McIntyre