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October 27, 2010

Always On Wireless: Clearwire

By Carl Ford
Partner, Crossfire Media

Reality Check, is there anyone who is offering enough Bandwidth for our Future?

Over the next few weeks, I intend to do a series of articles about the predicament of deploying the Wireless Internet. 4G is a marketing term more than a technology and as a result I am going to take some latitude and include companies and strategies that are beyond the existing cellular operators. We are going to look at AT&T, Clearwire, Lightsquared, MetroPCS, Sprint, T-Mobile, and Verizon Wireless. But we are also going to look at Apple (News - Alert), Cisco, Facebook, Google, Microsoft and Samsung.  

It is my contention that the Internet gave birth to new winners in networking and we should not limit our sights to what exists but rather what can be.

We are going to start with Clearwire, because, I think they see the potential for the wireless Internet better than most of us. Here is the case for Clearwire.

+1 Spectrum (News - Alert) Equals Bandwidth

If Spectrum is the answer to supporting bandwidth requirements, Clearwire is in the catbird seat. They own almost triple the spectrum of anyone else. They are turning on as many cities as possible. However, It is a new entrant with a different technology and the requirement for the end user is to match their 4G Solution.

+2 Vive la Difference

WiMAX has been maligned for a number of reasons mostly because of the old school of keeping the relationship with existing carriers. However, if you think you are delivering the Internet on a wireless network the operational management of Clearwire makes them a thought leader. They are the equivalent of Level3 for wireless, which means they can easily become an enabler for a very fragmented marketplace of devices that will have little resemblance to phone you use no matter how smart you and the device are.

+3 User Centric Business Model.

As a result of being on a different path, Clearwire is not SIM centric. It is in fact user centric, so unlike the other carriers who give you phone numbers in devices with the expectation that they are going to have individual sessions. Clearwire is planning to bundle with the understanding that your home, your mobile and you are going to be represented in multiple places in multiple ways. So not only will their devices be different, but also the applications that touch it will be as diverse as your choice as a consumer. And we are living in the age of wireless consumerism.

+4 A Different Voice Model.

Seeing themselves as an Internet company they are not trying to protect the voice side of the equation. They see voice as part of the data service. The result is their support of voice is part of their expectation of your social use of the network. I am not going to say much more about what they are doing but know that is going to be closer.

These are the things that are going to make them a success.

However, the competition is formidable and “the race is not always won by the swift.” The marketplace expects LTE to be dominant strategy in the future. The lead that WiMAX has in throughput capability has more to do with theory and than implementation, so the success is very dependent on execution. What can go wrong for Clearwire?

Here are some of the issues.

-1 Capital.

They need a lot of capital to rollout on this Greenfield. The company can do a Global Crossing equivalent with spectrum. If you will recall Global Crossing built their network on the work orders of others. And given how much other companies are light on Spectrum and reach, this is a great opportunity for Clearwire. This is why they are talking to T-Mobile. It also represents an interesting cross-licensing relationship with many small operators that should have made it to the asset side.

-2 Market Confusion.

The relationship with Comcast, Time Warner and Brighthouse represent a supplier and a reseller. They also have Google, Intel (News - Alert) and Sprint who have reasons to roll out services with them. The bottom line is, the customer could very easily make up its mind about Clearwire through the positives or negatives of their partner rollouts. Presently their rollouts with partners indicate they are not progressing quickly.

-3 Device Scarcity.

The reality of WiMAX is that it does not have a lot of devices. On the other hand almost every device that Clearwire has is a WiFI supporting solution that bridges WiFi (News - Alert). So it has the advantage of WIFI as its answer to the Femtocell strategy. This can be further complicated by the lack of supply if it hits a home run on a device, however nothing indicates that the WiMAX market is going to deliver a iPhone like run away success.

-4 Business Acumen.

It would be nice to say the strategy supports the Enterprise regaining some control of their employees phone use. The reality is the focus has been on consumer use and we should not expect a strong business strategy in the near future. On the other hand, they are willing to do a lot to win customers so a business that is looking for a mass migration can probably get a strong discount plan. More importantly if the business has already adopted the web, the Clearwire solutions will match their goals pretty well.

Bottom Line: If you are not voice centric and are looking to be as nomadic as possible, Clearwire is going to represent a service solution that will match to your needs.   Price wise they are positioned to stay flat rate and compete with the prepaid players. I expect that we will see them find markets longing to be always on the wireless Internet.

Carl Ford (News - Alert) is a partner at Crossfire Media.

Edited by Stefanie Mosca

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