Embarq said today it will end its wireless reseller agreement with Sprint (NYSE: S) Nextel next year, becoming the second phone company following Qwest, to terminate its alliance in recent weeks. Embarq was essentially an MVNO that allowed it to sell an Embarq-branded service on Sprint’s network, but sales fell short of expectations, according to the WSJ. Embarq entered the resale agreement after it was spun off from Sprint in 2006. Gene Betts, Embarq’s CFO said at an analyst conference today Embarq ended last year with only about 112,000 wireless customers—far below its expectations of signing more than one million wireless subscribers. Embarq will support existing customers until sometime in 2009, when it may transition them to another carrier. Meanwhile, the company is exploring ways of tying its landline service to wireless offerings regardless of the carrier.

Qwest announced earlier this month that it was ditching its arrangement with Sprint in favor of a five-year agreement with Verizon Wireless (NYSE: VZ) starting this summer.

AT&T (NYSE: T) sounded defensive about the speed of its network during a presentation to Wall Street analysts this morning. Currently, AT&T offers DSL-like speeds where it has HSDPA deployed, but AT&T’s Mobility CEO Ralph de la Vega said at a Morgan Stanley event today that by next year, it will start delivering speeds up to 20 mbps, and by 2010, they will surge to an impressive 100 mbps. Without saying it, I’m sure AT&T wanted us to point out that it will have a much faster network than the one being proposed by the high-profile Sprint (NYSE: S) Nextel and Clearwire joint venture that dominated the headlines last week. The yet-to-be approved Clearwire-Sprint JV, backed by Intel (NSDQ: INTC), Google (NSDQ: GOOG) and a handful of cable operators, expects to deliver around 6 mbps to 140 million people by the end of 2010.

De la Vega’s comments were likely a reaction to Clearwire and Sprint’s claims that they will be the first to roll out 4G in the U.S., and will be two years ahead of the competition. AT&T, Verizon (NYSE: VZ) and T-Mobile have all chosen to use LTE, a technology that hasn’t even been standardized yet. But AT&T is essentially arguing that it doesn’t matter—through simple software upgrades, it can have much faster speeds than Clearwire (NSDQ: CLWR). “It’s clear to us, we are in the early stages of the wireless data revolution, and there are significant opportunities ahead as we ramp up,” de la Vega said. “Through interim steps, we can deliver more speeds everyday. It’s a promising time for the business, and we have a strong record of executing, and we have a strong spectrum position that gives us a great foundation for delivering…We are in a new age—as I call it, a great age—of wireless. It is just ahead of us and we are positioned to lead.”

Sprint (NYSE: S) Nextel and Clearwire are getting ready to unveil a $12 billion joint venture to bulid out a nationwide WiMax network, according to the WSJ. There’s no details yet on whether it would include funding from Intel (NSDQ: INTC) or Google, or if the partnership would include cable operators such as Time Warner (NYSE: TWX) and Comcast (NSDQ: CMCSA).

The WSJ is now reporting that Sprint has agreed to merge its wireless broadband unit with Clearwire of Kirkland, Wash., which was founded by wireless entrepreneur Craig McCaw. The combined company has reportedly raised a total of $3.2 billion in funding from several sources that were rumored to be interested in a deal over the last several weeks. It includes $1.05 billion from Comcast, $1 billion from Intel, which was already an investor in Clearwire, $550 million from Time Warner Cable (NYSE: TWC) and $500 million from Google (NSDQ: GOOG). Smaller cable provider Bright House contributed $100 million. WIth the new investments, the company’s value stands at more than $12 billion, according to the WSJ. It appears that one of the other companies that had been rumored to be interested—Best Buy—has dropped out of discussions. USA Today reports another investor listed as putting $10 million towards the venture is Trilogy Equity Partners, a VC firm started by John Stanton, who helped found McCaw’s first wireless venture.

A deal like this is critical on a number of fronts. WiMax was starting to lose ground to a competing technology called LTE, even though it is still in the development phases; Sprint Nextel needed to do something to win over shareholder approval; and the cable operators wanted a way into wireless without making the risky bet on their own; and Clearwire needed more cash to continue its aggressive growth plans. It even gives Google influence over a wireless network, which it has been seeking through regulatory processes up until now. The WSJ says a deal of this kind will still have to get approval from the federal government.

As for some of the logistics, it appears that the company will operate under the Clearwire name, and that Clearwire’s CEO Ben Wolff would hold the same position, and McCaw will continue to be chairman. The company will offer both traditional voice service as well wireless broadband access using WiMax. The cable operators involved will be able to rebrand the service and sell it under an agreement with Clearwire (NSDQ: CLWR). The deal was expected to close during CTIA about a month ago, but obviously was complicated by the fact that so many heavy-hitting CEOs and giants were involved in the neogications. If the joint venture goes smoothly, it will be a well-funded competitor positioned to stand up well against wireless giants AT&T (NYSE: T) and Verizon (NYSE: VZ) (N, YSE: VZ) Wireless.

Not many reports are out yet, signaling that the deal is still really fresh, if not yet quite finalized. A Clearwire spokesperson did not respond immediately to requests for information. Fortune is now reporting that the companies may not talk until 6 a.m. tomorrow (Wednesday), or that the deal still may never occur.