Clearwire stays the course despite losses

Despite heavy losses, Clearwire is sticking to its plans to expand its WiMax wireless service to as many as 120 million people by the end of 2010.

The company, which was formed late last year by combining assets from Sprint Nextel and the original Clearwire, announced fourth quarter earnings Thursday. The company said it generated about $20.5 million in revenue and lost $118 million.

Even though the company said it would continue with its original plan to roll out its network, executives acknowledged that the speed at which new cities are added to the network may change depending on the economy.

The current plan calls for the company to extend its network to several cities in 2009, including Chicago, Atlanta, Las Vegas, Seattle, Honolulu, and Charlotte, N.C. New York, Boston, Washington, D.C., Houston, and San Francisco will be added the following year.

Clearwire's network uses a 4G wireless technology called WiMax, which provides much faster speeds than current 3G cellular technology. The company is already offering service in Baltimore and Portland, Ore. Clearwire also operates some fixed-wireless networks in other areas around the country.

The company has raised more than $3 billion from partners, Google, Intel, Comcast, and Time Warner Cable to build the new network. But many of these companies have already been forced to write down the value of those investments as Clearwire's stock has declined.

Meanwhile, Verizon Wireless has announced details of its plan to rollout its 4G wireless network, which uses a competing technology known as LTE. Verizon plans to test its network this year and will begin aggressively rolling out its service in 2010.

Chief executive officer Ben Wolff expressed confidence that his company has enough of a lead to take on the competition. "Clearly, a nationwide network will not happen overnight," he said. He added that competitors will not have ubiquitous coverage either from the start, and that it will take time for all players to expand their footprints.

As for the fact that Clearwire's investors have had to take write-downs already on their investment, CFO David Sach said those write-downs were merely taken due to accounting rules. And he said they shouldn't be viewed as a reflection on the company's future prospects.

[gerrrg]

I walked to a kiosk and started talking up with the folks at Clearwire.

I asked if they were planning on dropping their prices (I love to bait people) in the near future.

They asked why.

I might have mentioned LTE.

Apparently their sales folk have NO fear of LTE, believing that it'll be YEARS before LTE comes.

They were completely dismissive.

I was amused.

[Cheese McBeese]

@gerrrg. I agree with the Clearwire folks. By the time the dinosaurs deploy LTE, the game will have changed. Those who move quickly will survive.

[TheGeekReview]

Clearwire stinks, customer service isn't there and as soon as I can get DSL or Cable I'm dropping them.

[gerrrg]

@ Cheese McBeese

During VZ's last year, they had a total of $202 billion in total assets, $10 billion in cash, $26 billion in operating cash flow. It has the capability to outpace infrastructure spending of CLWR by huge proportions.

Trust me, VZ is no sleeping dinosaur. CLWR would be making a huge mistake if it shrugged off VZ as a dinosaur as you do.

Here we go again - the 4G war of words.

One point overlooked by almost everyone who comments on these issues is the matter of spectrum availability. You must have heard Ben mention it at least 10 times in the call.

Broadband wireless at 700 Mhz (regardless of whether its LTE or WiMAX technology used to deliver it) will suffer from one major problem - lack of spectrum. Clearwire's broadband wireless play at 2.5 GHz does not have this problem - they have up to 120 MHz of spectrum to use and at 2.5 GHz their channel re-use is very compact. The result is a VERY dense network. Trust me - VZW and anyone else trying to cram broadband wireless service into a relatively small 700 MHz band is going to rapidly become a victim of their own success when channels start to become congested - leading to frustrated customers. This is a longhaul game we are witnessing, unfortunately we have become an "instant gratification nation".

Now, let me put on my consumer hat - here is a thought - could we have a hybrid network with Clearwire's 2.5 GHz WiMAX in dense urban areas and VZW's 700 MHz network in suburban and rural areas where user-density is lower and then some sort of seamless mobility solution that would just let me access the right one at the right time. Now that be a sensible use of broadband. Anyone?

[robmx]

Agreed that the aggregate bandwidth for 700 MHz is less but to what degree can that be overcome by reducing cell size? And I agree that 700 MHz works more efficiently in rural areas due to better propagation. And isn't the intent of Clearwire to compete with fixed broadband while Verizon is going more for mobile broadband? 700 MHz will be far better for mobile IMO. And isn't there a lot of 700 MHz in the hands of entities who have or are thinking of using it for WiMax? Big Telcos spent most of their money for 700 MHz on urban centers.

[robmx]

I meant that there are quite a few licenses held by smaller entities in rural areas that could use WiMax. The thing is that AFAIK those entities right now would be leaning to LTE so as to mesh with the big Telcos LTE networks. And rural is where 700 MHz has an advantage over 2.5 GHz propagation wise.

In reply to robmx...

Reducing cell size means that the carrier can re-use the same frequencies/channels on closer cell sites. The bad thing about 2.5 is that it doesn't travel very far, the good thing about 2.5 is that it doesn't travel very far. You can use exactly the same argument in reverse for 700. Now, if you consider user desnsity as the driver for your network design and you had access to any spectrum you wanted you would design a high density 2.5 network with smaller cell sites to provide coverage in dense urban areas and a lower density 700 network with larger cells to provide coverage in suburban and rural areas. (just to finish that thougth you would design a satellite network to cover the highlands and islands).

This is just a wishlist because we know the carriers would NEVER agree to collaborating on such a system, they would all fight over the lucrative bits leaving only the scraps for their competitors. My point is that it really doesnt matter who designs what network where if a solution is available that allows me as a consumer to pick the right network at the right time and use them as if they were one BIG network. Seamless mobility is the answer to the problem that the 2.5 and 700 network will not be built the way we as consumers want it. Tariffing for data services is changing in Europe from a bucket plan to pay for usage. I expect that model to be adopted here which plays right into the hands of someone like Google to come along and create a new breed of MVNO that bulk buys airtme on all these networks and sells them to the like of you and i based on when we need them. We wont need subscriptions to all the networks - only to the MVNO. I cant wait.