The tug of war over wireless broadband provider Clearwire just became more interesting, and precarious for Dish Network. Sprint has raised its offer for the 50% of Clearwire it doesn’t already own to $5 a share — valuing the wireless broadband company at more than $14B — which tops Dish Network’s $4.40 a share bid. That led Clearwire’s board today to switch sides: It now recommends that shareholders support Sprint instead of Dish. They’ll have a chance to vote on July 8 following the company’s decision to postpone a June 24 special meeting. “The amended agreement with Sprint clearly acknowledges the significant value present in Clearwire – from our deep portfolio of wireless spectrum to the tremendous amount of progress the Clearwire team has made in improving our operations and beginning the construction of our next-generation 4G LTE network,” CEO Erik Prusch says. In addition, shareholders owning about 9% of Clearwire have said that they’ll support Sprint. Between these investors — and others including Comcast and Intel who’ve supported the wireless phone company — Sprint believes that a majority of independent shareholders will support it over Dish. If they don’t, then Clearwire must pay Sprint a $115M break-up fee.  

The developments pose a dilemma for Dish Chairman Charlie Ergen as he tries to create a national wireless broadband service. He has been amassing airwave spectrum rights but has said that he needs additional licenses. He had hoped to secure that by acquiring a large minority stake in Clearwire — and by acquiring Sprint. But Japan’s SoftBank is poised to win the mobile phone provider; Dish said yesterday that it would not raise its bid for Sprint and would focus on Clearwire. Now Dish appears to have lost its ability to influence Clearwire as well.

What will Ergen do now? “In the Alice in Wonderland world that is Dish, a complete failure of all its wireless ambitions would be the best-case scenario,” Moffett Research analyst Craig Moffett says. Investors “would be thrilled” if Ergen decides to give up his wireless broadband plan, sell his spectrum rights, and try to merge with DirecTV. “Whether that would be out of desperation — everything else would have failed — or Machiavellian brilliance would be irrelevant,” Moffett says. “What would matter is that the deal would be spectacularly lucrative and, better yet, would have a meaningfully better chance at regulatory approval for all of the other options Dish Network would have tried first.” Clearwire shares closed +7.3%, while Dish was nearly flat.