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It's official. Comcast, the nation's largest cable company, announced Thursday that it is buying a controlling stake in the TV network and movie studio NBC Universal.

The total value of the blockbuster media industry deal, which had been rumored since September, is estimated at around $37 billion. The new joint venture will merge Comcast's cable channels, which are worth about $7.25 billion, with NBC Universal assets that have been valued at around $30 billion, the companies said Thursday.

Comcast also plans to contribute about $6.5 billion in cash. The cable heavyweight will own 51 percent of the venture, and General Electric will own 49 percent. Jeffrey Zucker, who has been president and CEO of NBC Universal, will lead the joint venture.

GE, which owned 80 percent of NBC Universal before the deal, is getting about $8 billion in net cash for its contribution. The joint venture is taking on about $9.1 billion in debt, which reduces the amount of cash that Comcast has to put up for the deal. And it also provides the cash to pay GE.

The deal will make Comcast a major media player with several very profitable cable channels, including USA, CNBC, MSNBC, and Bravo. It will also have control over NBC's broadcast networks and TV stations, its film studio, and its amusement parks.

The New York Times reports that Comcast and GE had been working on the deal since March. Rumors of a pending joint venture surfaced in the press in September. But the final deal was delayed as GE negotiated a buyout with French media company Vivendi, which owned 20 percent of NBC Universal. Earlier this week, GE and Vivendi reached an agreement whereby Vivendi will get $5.8 billion for its 20 percent share. If the deal does not close by September, GE is still responsible for paying Vivendi about $2 billion, or about 38 percent of the agreed price.

Brian Roberts, chief executive of Comcast, said in a statement that NBC Universal is a perfect fit for Comcast, and it "will allow us to become a leader in the development and distribution of multiplatform 'anytime, anywhere' media that American consumers are demanding."

Roberts tried and failed to buy another major media company, Disney, in 2004.

Will cable-bashing undo the deal?
The deal is likely to be scrutinized by government regulators, namely the U.S. Department of Justice and the Federal Communications Commission.

Craig Moffett, an equities analyst with Bernstein Research, said in a research note in late October, when rumors of the deal were heating up, that regulators may find plenty of reasons to reject the acquisition.

The biggest problem for the deal could be the fact that GE and Comcast will try to close it during a midterm election year. Politicians taking sides on Net neutrality issues and the national broadband plan may find it easy to bash Comcast. And a marriage between the nation's largest cable and Internet service provider and one of the nation's three broadcast TV stations may ignite old fights over media ownership, a la carte billing, retransmission consent, and cable prices.

"Cable-bashing in an election year is a no-lose bipartisan proposition," Moffett writes in his note. "The headline risk is quite material. Approval of a deal, should one be reached, cannot be assured."

Comcast argues that the deal will be good for consumers by getting some movies on cable TV and on-demand services more quickly, since Comcast will control NBC Universal's movie catalog. Comcast may also be able to put content more quickly on cell phones.

Still, some consumer advocates, such as Free Press, oppose the deal. They say Comcast would have too much power in the entertainment industry.

One issue of concern is that Comcast could use NBC's programming to undermine rival TV services from phone companies, such as AT&T or Verizon Communications, or from cable operator Dish Network. Comcast could charge these competitors more for cable channels, while giving its own cable TV business a better deal. Comcast officials say this is unlikely. And the company has already proven that it offers fair pricing with its existing cable channels, such as E! Entertainment, G4, and the Golf Channel.

The deal may also have an effect on online video services, such as Hulu, which is owned by NBC, News Corp., and Walt Disney Company. That said, Comcast has been experimenting with its own online video service for some premium channels for Comcast customers. The company also already has a Web-based video aggregator called Fancast, which streams full TV shows and movies for all Web users.

Verizon Wireless and AT&T have ended their public legal spat over advertising, and have thus agreed to stop complaining about each other's advertising campaigns.

On Wednesday AT&T announced it dropped its suit against Verizon Wireless for allegedly misleading customers by showing its weak 3G coverage. And Verizon said it agreed to drop a suit it filed earlier this year against AT&T for claiming it had the "More Bars in More Places," the "Best Coverage," and the "Best Worldwide Coverage."

In its amended suit filed in August, Verizon said that AT&T had no basis to refer to its network as the best, because Verizon claims in its own advertising to have "America's Most Reliable 3G Network" and "America's Best 3G Network."

"Through these advertisements, AT&T claims to have a wireless network that is superior, both qualitatively ("More Bars") and quantitatively ("More Places") to the wireless networks of all other U.S. wireless carriers, including Verizon Wireless, both in the United States and worldwide, when in fact, none of those claims is true," Verizon said in its complaint.

But now it looks like AT&T and Verizon have made peace with one another, as AT&T dropped its case in Atlanta and Verizon dismissed its case filed in New York.

However, the lawsuits bring up an interesting trend that was noted recently in an article published by The New York Times. Increasingly, companies are suing each other over claims made in their advertising campaigns.

In addition to AT&T and Verizon Wireless, other longtime foes, such as shampoo and soap makers Pantene and Dove, dog food makers Science Diet and Iams, and soup companies Campbell Soup and Progresso have all haggled over ads, challenging competitors to prove their claims.

Some complaints over "misleading" advertising are filed with the National Advertising Division of the Council of Better Business Bureaus, which is the industry's main self-regulatory program for national ads. But others go to court and file lawsuits under the Lanham Act, which was passed in 1946 to strengthen trademark law. Verizon's lawsuit cited the Lanham Act.

While these lawsuits and complaints may be legitimate, the truth is that most consumers take these advertisements claiming to be the "best" or the "strongest" at anything with a grain of salt. And there is some indication that the mere publicity from these lawsuits can backfire on companies, giving consumers a negative impression of the company that files the lawsuit.

It can be argued that this has happened to AT&T. There have already been numerous reports about problems with AT&T's network, particularly for iPhone users. And when the company filed its lawsuit against Verizon, many consumers expressed anger at AT&T for whining about the advertisement, when many felt that the claims expressed in the advertisement were true.

By contrast, Verizon's lawsuit against AT&T was not well-publicized. In fact, most technology reporters and bloggers hadn't even known about or mentioned the suit until Wednesday when the two companies agreed to drop litigation against each other. It remains to be seen if consumers will also deem the dismissed Verizon lawsuit a bit whiny.

AT&T has dismissed its lawsuit against Verizon Wireless for using an advertisement that AT&T complained confused customers about its 3G wireless coverage.

(Credit: Verizon Wireless)

On Wednesday, AT&T formally dismissed the lawsuit. Last month, the wireless operator suffered a major legal setback when a judge rejected the company's request to force Verizon to pull its "There's A Map For That" advertising campaign.

AT&T filed its lawsuit in federal court in Atlanta in early November asserting that Verizon Wireless' advertisements mislead customers by suggesting that AT&T subscribers cannot access wireless Internet services throughout its network. AT&T has called the ads blatantly false and has said that the commercials have caused irreparable harm to the company.

The advertisements that Verizon is running show two maps that each indicate 3G wireless coverage. One map shows coverage for Verizon and the other depicts AT&T's coverage. Verizon just recently started airing another commercial that depicts Santa Claus' reindeer referring to Verizon's and AT&T's 3G coverage maps.

AT&T has also started running its own advertisements that are critical of Verizon Wireless. The ads feature Luke Wilson and slam Verizon for not allowing users to talk and surf the Web at the same time, something that wireless subscribers can do on AT&T smartphones.

Verizon Wireless declined to comment on the news of the dismissal. And AT&T also declined to comment further on the matter.

The Federal Communications Commission is shaking up the communications market with bold initiatives to overhaul the $7 billion Universal Service Fund to help pay for universal broadband and reallocate wireless spectrum for new wireless broadband services.

FCC Chairman Julius Genachowski presented plans for revising the USF program and reallocating spectrum during a speech on Tuesday in Washington, D.C., at The Innovation Economy Conference.

Julius Genachowski, FCC chairman

The Universal Service Fund is a $7 billion federal subsidy program that is funded by fees added to consumer phone bills. The USF was originally designed to provide subsidies to pay for phone service in rural communities and to low-income residents. But the FCC believes that the fund should also be used to help pay for universal broadband, a policy priority for President Obama's administration.

Revamping the fund has been controversial, as some rural phone companies have resisted any attempts at expanding the scope of the program. Genachowski acknowledged that making changes wouldn't be easy, according to a transcript of his prepared speech.

"This is a thorny issue, with no shortage of practical and statutory challenges," he said. "(But) we need to wring savings out of the system, protect consumers, avoid flash cuts, while ultimately moving USF in the direction it needs to go to support our 21st century platform for innovation."

Genachowski emphasized that reallocating some of these funds to help build broadband infrastructure in rural areas is important for spurring innovation.

"USF is a multibillion-dollar annual fund that continues to support yesterday's communications infrastructure," he said. "The goal of universality is as important as ever--and to meet our country's innovation goals, we need to reorient the fund to support broadband communications."

Genachowski also reiterated the importance of auctioning off more wireless spectrum to be used for mobile broadband services. He called wireless spectrum the "lifeblood of our wireless networks." And he said they are a critical part of innovation and infrastructure.

The FCC has already increased the amount of spectrum available to wireless companies threefold in the past few years, Genachowski, noting that experts believe that there will be a 30-fold increase in traffic on these networks. And without more spectrum, these networks will be congested and will stifle innovation.

"Given that spectrum can take many years to reallocate and build out, if we don't start the process now, we'll pay a steep price in innovation down the road," he said.

As part of his proposal, he says the FCC will encourage more efficient use of spectrum and devices through innovative spectrum policies. He noted that the FCC will also look at increasing spectrum flexibility and opening secondary markets for licensed spectrum use. And he said the agency will look into allowing more use of unlicensed spectrum, such as the "white space" spectrum that sits between broadcast channels.

But the most controversial proposal he has put forth involves taking away spectrum from current spectrum license holders, such as TV broadcasters, and reallocating those licenses to broadband wireless providers through another auction process.

"In order to support the full flowering of innovation, and to keep the U.S. globally competitive, we will need to find ways to free up new spectrum to mobile broadband," he said, according to the transcript of his speech. "This will require examining old allocation decisions--often decades-old--and evaluating them against current technologies and consumer demand."

TV broadcasters have vehemently resisted this proposal.

Broadcast airwaves are considered very valuable because they can travel long distances and penetrate walls. The most recent 700MHz spectrum auction, which auctioned off analog TV spectrum, is being used by operators such as Verizon Wireless to build 4G wireless broadband services. And Genachowski believes that more spectrum should be freed up to allow for more 4G wireless broadband services.

Finally, some good news from Nokia.

On Wednesday, the world's largest maker of cell phones said it expects sales volumes of mobile handsets to increase 10 percent in 2010 from 2009, as the market rebounds from a worldwide recession.

"Going into 2010, the overall mobile-devices market is stabilizing, and it is growing more in the areas where Nokia has competitive advantages," Nokia's new chief financial officer, Timo Ihamuotila, said in a statement.

Nokia said its worldwide market share of 38 percent would remain unchanged next year but that the company would increase revenue by focusing on stabilizing pricing on handsets. The average selling price of Nokia's phones had slipped over the past year. In the third quarter of 2009, the company's average price for a handset was 62 euros, or about $94. That was price was stable, compared with the previous quarter, but it was down from 72 euros during the same quarter a year ago.

This past year has been a tough one for Nokia and the rest of the cell phone industry. Nokia was hit hard by the economic downturn, as consumers put the brakes on spending. And for the fourth quarter of 2008, it saw sales drop 19 percent during the quarter, compared with the same quarter in 2007. And the company's profit fell about 69 percent.

Nokia slashed its annual forecast for 2009. And to cope with the deteriorating economic situation, it also announced that it would reduce about $905 million from its budget. Much of the cuts resulted in thousands of workers losing their jobs.

Besides the economic downturn, Nokia has been facing increasing competition from companies such as Apple, with its iPhone, and Research In Motion, with its BlackBerry devices. And now the company is facing even more competition in the smartphone market from Google Android phones, which will hit the market en masse in 2010.

Even though Nokia launched a new smartphone in 2009, the N97, the company still managed to lose market share in the high-end smartphone category.

Nokia says it's made improvements to the Symbian operating system that is used to power its high-end phones. But as the market gets more crowded with devices, it won't be easy to compete against popular iconic devices such as the iPhone. What's more, Nokia still hasn't managed to crack the U.S. market, the fastest-growing one for high-end handsets.

Today only a couple of Nokia's higher-end smartphones are subsidized and sold through U.S. carriers. This is a major problem, considering that the vast majority of American cell phone users buy subsidized devices in exchange for service contracts. The iPhone is currently selling for as little as $99 with a two-year contract from AT&T. Meanwhile, the Nokia N97 costs more than $500 at full retail.

Nokia has also been focusing a lot of effort on building up its services business. The company is building a marketplace and selling services through its Ovi online portal, which enables cell phone consumers to buy music, videos, and navigational maps.

The company is expecting to generate 2 billion euros in sales next year from its services unit. And it expects to grow this number in 2011, when it's expected to have more than 300 million active Ovi users. It plans to maintain a focus on applications for its phones, targeting net sales from its services unit of 2 billion euros or more in 2011 from an expected 300 million active users by the end of 2011.

Meanwhile, Nokia's joint venture with Siemens to sell telecommunications equipment has also been struggling. In October, the company was hit with a 908 million euro goodwill write-down on the business unit.

But Nokia now believes that the Nokia Siemens venture will also gain market share in 2010, even as the communications infrastructure market is expected to be flat in euro terms from the previous year, Nokia said.

Updated 5:10 p.m. PDT with information about the financial details of the deal.

Comcast is very close to sealing the deal to acquire NBC Universal, CNBC anchor and reporter David Faber reported Tuesday. The only thing left to do is sign the papers.

Faber said in a story posted on the CNBC Web site that the deal is expected to be formally announced on Thursday. But CNET sources close to the deal say the final details could take longer to tie up, and the final announcement could be pushed back until early next week.

Earlier Tuesday, The New York Times and The Wall Street Journal reported that General Electric, which owns 80 percent of NBC Universal, had reached a tentative agreement with French media company Vivendi, which owns 20 percent of NBC Universal. GE agreed to pay $5.8 billion to buy back the 20 percent stake, reports said.

The Vivendi stake was the only major obstacle standing in the way of an agreement between GE and Comcast. It's been reported that the companies have valued the deal at $30 billion.

While the value sounds high, in reality Comcast is getting a pretty good deal. The way the transaction is structured, Comcast would contribute its cable TV stations and $6 billion in cash to get 51 percent of NBC Universal. And GE would contribute all of the NBC Universal assets, including the movie studios, cable channels, theme parks, TV production and broadcast properties for a 49 percent stake in the company. The newly formed joint venture would then take on an additional $9 billion in debt.

These assets, the new debt, and the cash contributed by Comcast is how the companies arrived at the $30 billion valuation. This means that Comcast will only be contributing in cash about a fifth of the overall valuation of the company.

The deal will also include a provision that will allow GE to sell its remaining stake in NBC Universal down the road. At around the three year mark and the seven year mark, the NBC Universal joint venture will have the opportunity to use its own cash to buy out GE's remaining stake in the company. This transaction would give Comcast 100 percent control of the company. If the joint venture cannot come up with all of the cash to buy out GE, Comcast can contribute around $2 billion to buy the remaining stake. But the company has put a back-stop clause into the deal to ensure that the amount of cash that Comcast spends to acquire full control of NBC Universal is not over a pre-determined amount.

But even when the business deal is officially signed and sealed, the transaction is far from being completed. The acquisition will still have to pass muster with the U.S. Department of Justice, as well as the Federal Communications Commission. Government regulators are expected to closely scrutinize the deal in a process that could drag on for more than a year.

Faber's sources say they expect the deal will be approved by regulators. But Craig Moffett, an equities analyst with Bernstein Research, said in a research note in late October, when rumors of the deal were heating up, that regulators may find plenty of reasons to reject the acquisition.

The biggest problem for the deal could be the fact that GE and Comcast will try to close it during a midterm election year. Politicians taking sides on Net neutrality issues and the national broadband plan may find it easy to bash Comcast. And a marriage between the nation's largest cable and Internet service provider and one of the nation's three broadcast TV stations may ignite old fights over media ownership, a la carte billing, retransmission consent, and cable prices.

"Cable-bashing in an election year is a no-lose bipartisan proposition," Moffett writes in his note. "The headline risk is quite material. Approval of a deal, should one be reached, cannot be assured."

If the deal is allowed to be completed, it would make Comcast one of the nation's largest entertainment companies. Comcast wants NBC Universal mainly for its cable channels, such as Bravo and CNBC. Comcast already owns several channels of its own, including E! Entertainment, the MLB Network, G4, and the Golf Channel.

Good for consumers?
One of the synergies from the deal that could benefit consumers is that some movies may reach cable TV and on-demand services more quickly, since Comcast will control NBC Universal's movie catalog. Comcast may also be able to put content more quickly on cell phones.

Still, some experts are nervous that Comcast would wield too much power in the entertainment industry.

Regulators will likely look at whether Comcast could use NBC's programming to undermine rival TV services from phone companies, such as AT&T or Verizon Communications, or from cable operator Dish Network.

The deal may also have an effect on online video services, such as Hulu, which is owned by NBC, News Corp., and Walt Disney Company. That said, Comcast has been experimenting with its own online video service for some premium channels for Comcast customers. The company also already has a Web-based video aggregator called Fancast, which streams full TV shows and movies for all Web users.

Comcast tried and failed to buy Walt Disney Company back in 2004. And analyst Craig Moffett believes that a failed attempt to buy NBC Universal could be devastating to the company's stock price.

"Comcast has again clearly signaled its desire to be in the content business," he said in his research note in late October. "In the absence of a deal, investors would be left waiting for the next shoe to drop."

General Electric and French media company Vivendi have reached a tentative agreement, which will clear the path for cable giant Comcast to buy NBC Universal, according to reports in The Wall Street Journal and The New York Times.

The stories cite unnamed sources who say under the terms of the deal GE will buy Vivendi's 20 percent stake in NBC Universal for roughly $5.8 billion. Vivendi's ownership of NBC is one of the hurdles that stood in the way of GE selling the TV and movie company to Comcast in a deal worth about $30 billion.

The Journal is reporting that Vivendi also won some concessions as part of the deal. Specifically, if GE's separate Comcast deal doesn't close by the end of 2010, GE may have to buy out as much as $2 billion of Vivendi's stake in advance, the newspaper said.

Vivendi had said during the negotiations that it didn't want to assume risk that the Comcast transaction would be delayed by regulators or blocked by others, according to the Journal's sources.

Experts believe the deal could get regulatory approval within six months to a year.

The Times reported that GE and Comcast could still squabble over the price of the deal, but it's likely that some agreement will be hashed out. The final deal could be announced as early as Thursday.

GE has been looking to dump NBC as costs rise. Meanwhile, Comcast, the largest cable provider in the country, has been wanting more control over TV and movie programming. This control not only helps the company control costs on its cable side, but it could also help the cable operator expand its business as it moves more services online.

Motorola's and Verizon Wireless' $100 million marketing campaign for the Motorola Droid seems to be paying off with strong sales that will likely result in more than 1 million devices being sold by the end of the year.

The Droid, the only smartphone currently on the market that uses Google Android's 2.0 operating system, is Motorola's second Android device and it's available only on Verizon Wireless's network. The device is turning out to be the hit phone of the season, thanks in large part to an expensive and extensive advertising campaign.

Motorola Droid

(Credit: Motorola)

Neither company is reporting sales figures. But analysts say sales look good. The companies have likely sold between 700,000 and 800,000 Droids since the device was launched in early November, according to equity analyst Mark Sue of RBC Capital Markets.

"Verizon's big marketing push for the Droid is strengthening as we close in on the holidays, and following our round of checks, we believe about 700,000 to 800,000 Droids have been sold, making our hurdle of 1 [million] Motorola Droids achievable for 4Q09 [ending December 31]," Sue said in his research note. "Motorola, for its part, has done a good job on the production side, and our survey of over 100 stores indicates strong demand, limited stock outs, and very few returns."

John Stratton, executive vice president and chief marketing officer for Verizon Wireless, said when the device was launched in late October that Verizon would be pouring in more money to market this device than any other phone it has ever sold. And now it looks like the money has been well spent. From advertisements that specifically highlight the Droid to ones that focus on Verizon's extensive and reliable 3G wireless network, it's clear that the company has AT&T and the Apple iPhone in its crosshairs.

AT&T has actually sued Verizon over the advertisements about its 3G wireless network coverage.

Some Verizon Wireless stores, especially in major cities, are selling between 100 and 200 Droids per week since the launch in early November, Sue added.

The success of the Droid is good news both for Motorola and for Verizon Wireless.

Motorola comeback
For Motorola, the Droid represents a chance to make a comeback in the cell phone market. The iconic American company that practically invented the cell phone market has struggled for the past several years now. After the runaway success of the ultra-thin Motorola Razr in 2004, the company has been unable to come up with a hit phone. And it has steadily lost market share to other competitors, such as Nokia, Samsung, and LG Electronics. It's also ceded market share in the fastest growing segment of the market, smartphones, to newcomers like Apple and Research In Motion.

Motorola's mobile devices CEO Sanjay Jha took a bold gamble more than a year ago when he decided to dedicate the company's resources to building phones using the Google Android operating system. The Droid and the Motorola Cliq, which is exclusively sold on T-Mobile USA's network, are the first two Motorola Android phones to hit the market.

But Jha said the Google Android operating system will not only be used in high-end devices like the Droid, but it will also be used to power less expensive phones, creating a new tier of smartphones that will eventually replace the basic feature phone category. Jha said the company will launch at least 20 more Android devices in 2010.

The success of the Droid is an important first step in getting Motorola back on track. But equity analyst Ittai Kidron of Oppenheimer said in a research note Monday that sales of the Motorola Cliq are falling short of expectations. Motorola is expected to sell 1.5 million smartphones in the fourth quarter. And two-thirds of them are expected to be Droids.

Kidron said the Cliq is not selling well mostly because of issues with battery life. Motorola is supposedly preparing a software patch to fix the problem. But he also noted that T-Mobile appears to be losing interest in the device and is not marketing it heavily.

But T-Mobile says that the Cliq is doing just fine. And the carrier said that it's committed to marketing the phone through the holiday season.

"The Motorola Cliq is very popular among our highly connected customers and is the only device with Motorola's innovative Motoblur solution," a company spokesman said. "T-Mobile is excited about the Motorola Cliq for the holidays and continues to showcase it prominently in T-Mobile retail stores and with recent holiday deals."

Verizon's iPhone alternative
The Droid's success is also important to Verizon Wireless, the nation's largest wireless operator in the country. It is the first device that offers a true challenge to Apple's iPhone, which runs exclusively in the U.S. on AT&T's network. While Verizon has a strong reputation for its network, consumers often complain about its lack of cool phones. Up to this point, Verizon has mainly competed against AT&T and the iPhone with RIM's BlackBerry devices. But RIM's touch-screen BlackBerry Storm, which was first introduced a year ago, was largely a disappointment.

The Droid offers Verizon customers an alternative to the iPhone on the Verizon network. This fact could help Verizon retain some consumers who were thinking of leaving for the iPhone. But it might also attract new customers who are either disappointed with AT&T's service or have heard bad things about the network.

Verizon Wireless representatives say the Droid is certainly an important part of the company's device line-up.

"We are pleased with sales over the holiday weekend," Brenda Raney, a spokeswoman for the carrier said in an e-mail. "This phone clearly fits the needs of a number of customers who are excited about its availability on the Verizon Wireless network."

But if analyst data is to be trusted, it is clear that the huge marketing budget for the Droid is at least part of the reason why the device has been so successful. The HTC Droid Eris, another Android device sold exclusively on Verizon's network, is not selling as well as the Droid, Sue said in his note. The HTC Droid Eris went on sale the same day the Droid was launched, but with much less fanfare.

Part of the problem is the fact that there are many Android devices coming to market. And the number will only increase next year. The lesson from the success of the Motorola Droid is clear. If device makers and carriers hope for break-out success, then they will have to spend big on marketing.

Wireless broadband provider Clearwire said late Tuesday that it is has racked up another $920 million in debt to help it finance the deployment of its nationwide 4G wireless network.

The company had already nabbed $1.85 billion of senior secured notes due in 2015 to help it pay off an existing $1.4 billion debt payment. In total, Clearwire has raised nearly $2.8 billion in debt and equity in the past few weeks.

Earlier this month, some of the company's investors also kicked in an additional $1.5 billion in funding. Sprint Nextel, Intel, Comcast, and Time Warner Cable all contributed to the additional funding. Google, which also invested in Clearwire, did not contribute to the latest round.

Clearwire said earlier this year that it needed $2 billion to $2.3 billion in additional funding to ensure its network could reach at least 120 million people by the end of 2010.

Building new telecommunications networks is not cheap. And many analysts have said they believe that Clearwire will actually need even more money to build its network.

As of the end of the third quarter, Clearwire reported its network was up and running in 13 markets, including Chicago, Baltimore, Portland, and Philadelphia. The company will expand this list next year as it tries to meet that 120 million customer goal.

Even as it builds its network, Clearwire is struggling to sign up new customers. In the third quarter, it signed up a total of 173,000 new subscribers bringing its total subscribership to 550,000. This figure includes consumers who have signed up for service via Clearwire's reseller partners, Sprint, Comcast, and Time Warner Cable. It also includes customers who had already signed up for Clearwire's pre-WiMax service that offered fixed wireless broadband.

A broader network footprint should help Clearwire win more customers. And the company's management team says it is confident that this latest funding will finally be enough to help the company move forward with its plan.

"With this latest tranche of additional funding, we have not only exceeded the amount of capital that we have previously stated we needed to fully fund our business plan, but we have also secured additional capital that will allow us to expand more aggressively by covering more people and with more capacity than we had previously planned," Bill Morrow, CEO of Clearwire, said in a statement.

Even with an expanded network and plenty of cash to build it, Clearwire's future is still somewhat uncertain. The company faces tough competition in the wireless broadband market. Not only is Verizon Wireless, the nation's largest cell phone provider, building its own 4G wireless network using a competing technology known as LTE, but other service providers such as T-Mobile USA are upgrading their networks with advanced 3G technology that matches Clearwire's WiMax in terms of download speeds.

The advantage these souped-up 3G networks have over Clearwire is scale. They can leverage a deep device and equipment ecosystem, helping reduce the overall cost of deploying networks and offering services. By contrast, WiMax is a niche technology. Some service providers around the globe are using WiMax to provide fixed wireless broadband. Others, like carriers in South Korea, are using a pre-WiMax standard to offer service. But Clearwire is one of the few companies using the standard version of WiMax to build a large mobile network.

The company has backers, such as Intel, which can drive some demand by embedding WiMax chips into laptops. But so far, there haven't been compelling mobile products with WiMax built-in.