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Intel, wireless pioneer McCaw team up on WiMax

The chipmaker and Craig McCaw's latest company partner on WiMax--a significant move for the emerging industry.

SAN FRANCISCO--Intel and cell phone pioneer Craig McCaw's latest company, Clearwire, plan to develop and install high-speed networks based on broadband technology commonly referred to as WiMax.

Under terms of the deal, announced Monday here at the CTIA Wireless IT & Entertainment 2004 trade show, McCaw's Clearwire will install WiMax network equipment that uses Intel chips. In exchange, Intel Capital will make a "significant" investment in Clearwire.

Intel Capital is the chipmaker's investment arm and has $150 million to fund companies. Financial terms of the deal were not disclosed.

The partnership is considered to be a significant move for the emerging WiMax industry. WiMax is a radio technology that promises two-way Internet access at several megabits per second, with ranges of several miles. Backers of the technology believe that it can challenge DSL and cable broadband services because it offers similar speeds but costs carriers less to install, as it doesn't require roads to be torn up.

Despite a lot of recent attention, WiMax technology is years away from widespread use; it will take root in Europe and Asia before spreading to U.S. shores, according to research firm Parks Associates.

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Intel is making the same level of commitment to WiMax as it did when it entered the Wi-Fi market several years ago with its Centrino chips, Intel Executive Vice President Sean Maloney said during a keynote speech. Wi-Fi radios are now embedded in nearly 100 percent of all laptops, he noted.

Analysts believe that, based on what its backing did for Wi-Fi, Intel's support may indeed help popularize WiMax, an industry term for devices that use the 802.16-2004 standard.

A $300 million marketing campaign for Intel's Centrino mobile technology helped popularize Wi-Fi. The chipmaker plans to similarly make WiMax a household technology. Intel initially sees the two wireless technologies coexisting. But it is working on a WiMax part that can be used in mobile devices, such as laptops, that are based on the 802.16e mobile standard.

"This is interesting. These are two very big names," said Robert Pepper, chief of policy development for the Federal Communications Commission. "This has the potential to do for WiMax what Intel's Centrino did for Wi-Fi."

The FCC has been active in its support of wireless broadband technologies, with WiMax being the leading candidate as a potential third option to DSL and cable. The agency has been clearing space in the radio spectrum to accommodate new wireless technologies.

Still, WiMax has a ways to go before it can be considered a reasonable option. Products that are certified for interoperability have not yet been released, and chips from Intel aren't expected until the end of the year. Additionally, service providers have only been testing the technology and expect WiMax to initially be a second option--giving customers access in rural areas or as a backup to wired networks in congested regions like cities.

More companies, such as Cisco Systems and Symbol Technologies, are gradually getting involved in the development of WiMax. Many view it as a promising wireless technology because of its broad industry support.

McCaw's role in Monday's deal is potentially meaningful, given his track record with wireless technologies.

McCaw is the mobile-industry billionaire behind McCaw Cellular Communications, one of the first successful cell phone providers, which AT&T acquired in 1994. He is also a major shareholder of cell phone carrier Nextel Communications and satellite company ICO. Clearwire, which was created about a year ago, has already launched a service in Jacksonville, Fla. Some believe that Clearwire will compete with wireless services from the nation's largest cell phone companies.

"We went to Intel and said, 'You are critical'" to the spread of WiMax networks, McCaw told an audience of about 1,000 wireless executives at the show. As for the future of WiMax, McCaw dismissed claims that it's competing with 3G, or third-generation, wireless networks being built by cell phone carriers.

"No one technology wears out," he told the audience. "Look at Western Union. They are moving money for al-Qaida now."