Sprint to pay $1 billion to use Clearwire's 4G network through 2012

Sprint Nextel and Clearwire today announced an amendment to their long-term agreement that establishes new wholesale pricing terms and provides Clearwire a minimum of $1.025 billion from Sprint to be paid during 2011 and 2012 for 4G wholesale services. The minimum usage commitments are as follows: $300 million in 2011, $550 million in 2012, and $175 million in pre-payments for 4G wholesale services to be used this year, next year, and beyond.

The companies also reached an agreement regarding wholesale pricing for Sprint devices that operate on both Sprint's 3G network and Clearwire's 4G network. The agreement includes usage based pricing and volume discounts as well as minimum payments per 4G device.

Clearwire and Sprint also plan further collaboration to expand Sprint's capability to offer customized solutions using 4G technology. This is expected to allow Sprint to better serve its target enterprise and government customers with mission critical wireless broadband solutions both for mobility and local area network applications and expand its Machine-to-Machine solutions for large and small businesses. Last but not least, the agreement also expands the mutual re-wholesaling rights whereby both companies can resell the other's respective 3G and 4G networks to other parties.

"We are pleased to reach this wholesale pricing agreement with Clearwire," Sprint CEO Dan Hesse said in a statement. "We look forward to working with them under this new agreement to provide an expanded offering of 4G capabilities and solutions for Sprint customers."

Sprint really needs this deal given that last month AT&T announced that it had entered into a definitive agreement to acquire T-Mobile USA. Sprint is fighting that acquisition, but in case it loses, the company needs to be able to compete with the only other two much larger competitors: AT&T and Verizon.