Clearwire and the Sprint iPhone

NEW YORK (TheStreet) -- A report first published Monday in The Wall Street Journal is puzzling to say the least.

Citing anonymous sources, the report states that Sprint ( S) has committed to buy at least 30.5 million Apple ( AAPL) iPhones.

But why would Sprint have to commit to any particular number of iPhones?

Over the last year, the conventional wisdom in the market has been that Sprint's iPhone would be EVDO only -- not WiMAX. Thus, it would be identical to Verizon's ( VZ) iPhone.
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What does this mean? It would mean that Apple would not be taking any inventory ortechnological risk with Sprint. The devices, being identical, would be completely fungible.

Both Apple and Sprint know that a Sprint iPhone would sell well, and therefore Apple would have no special reason to make Sprint promise to buy a specific quantity.

So how do we explain Sprint having to order 30.5 million of them? Afterall, Sprint doesn't have even 50 million customers in total anymore.

There can only be one explanation, and Jonathan Geller of the widelyread BGR.com blog provided it yesterday.

Citing a source, Geller says the Sprint iPhone will be different from other carriers'.

The chief attribute of this new iPhone 5 will be that it works onWiMAX, which is the network built by Clearwire ( CLWR), of which Sprint owns approximately 50%.

For Apple to take the risk of making a special version of the iPhone that would work only on this Clearwire network, Apple would need a minimum commitment. This explains the 30.5 million unit order, assuming the whole thing is true to begin with.

This would be nothing but huge for Clearwire, although somewhatuncertain for its largest shareholder, Sprint.

Why? Clearwire needs money for network expansion. Sprint will be effectively 100% reliant on Clearwire, assuming the BGR.com story is true. This seemslogical if in turn The Wall Street Journal story is true.

This would effectively guarantee Clearwire's financing. Sprint would not jeopardize its relationship with Apple, or for that matter its own future, so it would have to ensureClearwire's financing.

Furthermore, this puts the spotlight on the capacity of Clearwire's network. Sprint has to pay Clearwire for the network usage, and we all know that network usage by iPhone owners is higher than most if not all other smartphones. What does mean? Sprint has to pay Clearwirehuge network usage fees.

The bottom line is that if The Wall Street Journal report is true, theconclusion asserted in the BGR.com blog is the only reasonable one, soI believe blog.

Furthermore, if both articles are true, that means that this would be hugely positive news for Clearwire, although the impact on Sprint would be more dubious.

It would be positive for Clearwire because it would ensure that Clearwire's capital needs would be met, and that Sprint would have to pay Clearwire huge network usage fees from data-hungry iPhone users.

We might as well stop calling it "The Sprint iPhone" and instead callit "The Clearwire iPhone."

Oh, wait. I wrote about this already almost two years ago, right here on TheStreet: " Apple Should Turn to SprintClearwire"

At the time of publication, the author was long Apple and Clearwire.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Anton Wahlman was a sell-side equity research analyst covering the communications technology industries from 1996 to 2008: UBS 1996-2002, Needham & Company 2002-2006, and ThinkEquity 2006-2008.

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