News Corp., DirecTV take broadband to the Max

July 19, 2006

News Corp.'s zealous embrace of interactivity soon will reach way beyond the runaway success of the social networking Web site MySpace when its majority-owned DirecTV decides on a path and partners for creating a national WiMax network.

Approval is imminent for the project that could take at least two years and $2 billion, providing News Corp. and DirecTV a valuable wireless interactive broadband loop with consumers to directly sell content, advertising, goods and services. WiMax is a wireless a broadband technology often referred to as "WiFi on steroids" with a much wider 30-mile range than the more limited access offered by WiFi services. WiMax, which is short for World Interoperability for Microwave Access, also promises to provide more security and speed than traditional wireless connections.

"If we can pull something off ... there is no reason why that shouldn't link in with everything," News Corp. chairman and CEO Rupert Murdoch said in a recent interview. "I would expect to have wireless broadband advanced in at least two or three cities before the end of this year, and then it might take two or three years to build it out across the entire country," Murdoch said.

High-level sources say the unprecedented undertaking will involve strategic equity partners that bring WiMax spectrum, equipment and other expertise to the mix. In one of the most likely scenarios, News Corp. and DirecTV have been in advanced talks with Clearwire Corp., a WiMax venture of Craig McCaw, in which chipmaker Intel Corp. and equipment manufacturer Motorola Inc. recently invested $900 million.

McCaw has been amassing one of the largest stables of licensed radio spectrum to build his own national wireless WiMax network. Intel, which has a vested interest in the commercial success of WiMax, particularly for PC users, has been one of Clearwire's partners from the start.

As an alternative, DirecTV also has been exploring the possibility of partnering with other WiMax spectrum owners such as Mobile Satellite Ventures (MSV) or acquiring its own WiMax spectrum when such rights are auctioned off by the FCC on Aug. 9. In such cases, DirecTV would have to pull together, on its own, more of the elements needed to build its own WiMax network.

Clearwire, such leading cable operators and DirecTV rivals as Comcast and Time Warner and telcos like Sprint Nextel also are among the more than 250 companies that have filed with the federal government to bid in the auction of wireless spectrum.

See complete article by Diane Mermigas on Hollywood Reporter: News Corp., DirecTV take broadband to the Max.