Sprint Executives Resign From Clearwire Board Due to Anti-Trust Laws

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Sprint Executives Resign From Clearwire Board Due to Anti-Trust Laws

clearwire logo.jpgThe three Sprint (S) executives that were residing on the Clearwire(CLWR) board have resigned, leading many to question the stability of the company. Sprint, owning 54%, is the majority shareholder of Clearwire. With three empty seats on the board and Sprint CEO Dan Hesse available to perhaps sit on another board, have more investment options been opened for both Sprint and Clearwire?

At face value, the reasoning for Sprint's resignation from the board is sound.

Clearwire was informed by Sprint that the decisions to resign were made out of an abundance of caution to address questions raised by Clearwire regarding new developments in anti-trust law.

This was the statement released from Clearwire regarding the decision. Judging from the points of "analysis" that many articles are focusing on, there seems to be a misunderstanding on the definition and application of anti-trust laws.

Anti-trust laws are created to prevent monopolies. The United States doesn't regard monopolies as illegal; the act of limiting competition is illegal. A brief reminder: United States vs. Microsoft (MSFT). That case was regarding the bundling of Internet Explorer with Microsoft Windows and marked a precedent of increased government regulation over futuretechnological process. But how is this relevant to Sprint and Clearwire?

It's a known fact that the two companies share towers, and most likely, deployment strategies. But that has no relevance to any anti-trust issues. The problem would be in bundling the two and therefore limiting the competition through a joint venture. As of yet, there have been no actions from either company suggesting such an event. Until Sprint starts selling packages with Clearwire home service or vice versa, nothing illegal is going on. They utilize the same WiMAX network, not anything past that.

These "new developments in anti-trust laws" are either legitimate new developments or a ruse. Maybe the CEO of one company should heed warning and distance himself from big investments that may create a monopoly of a sort of his niche in telecommunications. Or, as everyone else seems to be convinced, there is now room for other companies to create innovative marketing strategies. Even if another company were to associate itself with Clearwire, at this point it would just be a redistribution of money because Clearwire has already been deployed in over 50 markets. Another telecom company can't even attach itself to Clearwire's 4G WiMAX network because it is already in use with Sprint. In order for a merge to work it would have to be with Sprint too, in order to have access to both towers and spectrum. But, if anything, that would be creating the biggest monopoly in the U.S. telecom arena. So, what is Hesse playing at by resigning? His intentions may not be known until the next quarterly earnings report. Hopefully they will shed some light on this conundrum.

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