Sprint Nextel and Clearwire have called off plans to build a joint nationwide WiMax network announced in July.

The companies had failed to resolve complexities associated with the deal, and were unable to reach agreement on the terms of the transaction.

Sprint has said that it remains committed to developing WiMax services, and to deploying a WiMax network to provide customers with mobile broadband internet.

"We are on track for a soft launch late this year in the Chicago and Baltimore/Washington markets and commercial launch in 2008," said Keith Cowan, president of strategic planning and corporate initiatives at Sprint.

"In line with Sprint's mandate of improving the customer experience and simplifying our operations, we look forward to working with Clearwire on opportunities such as roaming and standards."

Analysts have warned that the announcement delivers a significant blow to the WiMax community.

Katrina Bond, principal analyst at Analysys, said: "Pulling out of the agreement with Clearwire is a pragmatic decision on the part of Sprint Nextel, which is focusing on more immediate priorities of customer retention while it seeks a new chief executive.

"But it is a setback for WiMax in that it confirms the riskiness of a strategy to move quickly to mobile WiMax, and it slows the momentum behind WiMax."

Bond added that this is a step backwards for WiMax after an otherwise positive year in which the technology was approved as a global standard by the International Telecommunication Union.

Several small operators have launched or started rolling out commercial WiMax services, and Sprint Nextel announced plans to deploy WiMax for its future mobile broadband services.

"Similarly, Clearwire remains committed to building a mobile WiMax network in the US, and migrating its current network to mobile WiMax," said Bond.

"However, companies wanting to pursue opportunities with mobile WiMax might find a stronger business case targeting those with the willingness and ability to pay for broadband services in developing telecoms markets, where competition from existing mobile operators and from fixed broadband networks is less intense."

Sprint expects to continue to work with Clearwire on future projects around the deployment of WiMax systems.

"Ongoing discussions include the possibility of roaming, frequency interference coordination, spectrum exchanges, technology evolution and development and network standards," the firm said.