24/7 Wall St.

Sprint (NYSE: S) was dead and being lowered into the grave when the big firms which really hate the phone companies came in and exhumed it  At this point Verizon Wireless and AT&T (T) are the hegemonic players who have locked up cellular service in the US. Between them, they have 130 million subscribers. Their customer bases are rising. Sprint’s is not. Their profits are spectacular.

Dislodging leaders from the high ground takes more than a modest assault. Sprint would not have been able to do it on its own. Bring on Google (GOOG), Intel (INTC), Comcast (CMCSA), and Time Warner Cable (TWC). They will put over $3 billion into a joint venture between Sprint’s broadband operation and WiMax start-up Clearwire (CLWR).

Sprint is actually a bit player in the new venture. If it did not exist, the companies supporting the new plan would have to have created it. Sprint is in on the deal because it is convenient to use their current WiMax plan and customer base as a vehicle to get at the two largest cellular providers.

The new alliance is a real problem for Verizon Wireless and AT&T. They have been about to bundle cellular service with their landline, TV, and broadband products. For crying out load, one of them even has the Apple (AAPL) iPhone.

Google doesn’t have much use for the iPhone. They want a G-Phone which runs their software. Now they can run it off the new WiMax wireless broadband network which they are helping to build. It is a much cheaper alternative than buying spectrum from the FCC at a price of $4 billion. It gets them a home for their handset-based operating system, Android.

Comcast and Time Warner get some revenge against their telecom rivals for coming into their backyards with fiber TV service. Intel (INTC) is putting money in because it wants to sell chips for WiMax devices.

The next generation of wireless broadband will make the current 3G deployments seem very slow. Verizon and AT&T are not far along in articulating and building out their technology to attack this market. That give the WiMax program an important head start.

Sprint did not do much other than being in the right place at the right time. Now it will be the backbone of the first real assault on the national leadership that the phone companies have in the cellular business. The new investors are motivated by profit, and they are motivated by vengeance. It is a mix which should make the thing work.

Douglas A. McIntyre