WiMax may be Clearwire's technology of choice today as it builds out its nationwide 4G wireless network, but the upstart carrier may eventually migrate to a competing technology that's expected to be used by most of the world's major wireless operators.
Clearwire's willingness to add additional 4G technologies to its network in the future will likely help it compete more aggressively in the future with other 4G wireless providers, such as Verizon Wireless. And ultimately this could mean more choices, better services, and more competitive pricing for wireless broadband services for consumers.
In an interview with CNET after the 2010 CES trade show in Las Vegas where Clearwire was showing off its new network, Mike Sievert, chief commercial officer for Clearwire, said his company doesn't want to be identified solely as a WiMax carrier. Instead, he said people should think of Clearwire as a mobile broadband company that is open to different types of technology. This is a big change for a company that has been held up as the poster child for WiMax.
"We take a long term view of the market and we do not have a myopic view of a particular flavor of technology," he said. "We are building our network to be future proof. Because after 4G there will be 5G and 6G."
There are currently two major technologies that are in contention as the foundation of next generation wireless networks: WiMax and LTE or Long Term Evolution. These technologies are similar in many technical respects, but they are different enough at this point in time that devices and equipment built for one technology cannot be used with the other.
Clearwire, which has partnered with Sprint, is currently using WiMax to build its network. And Sievert says there are no immediate plans to change that. Meanwhile, most of the world's largest mobile operators including Verizon Wireless, AT&T, Vodafone, and Telefonica are planning to use a competing technology, LTE.
The major benefit of LTE is that it allows existing GSM mobile operators to more easily and cost-effectively migrate to the next generation of wireless. But WiMax, which is similar to LTE, was available in the market first. And as a result, its technology is more mature than LTE's. This is the main reason that Clearwire chose to use WiMax in the first place.
"WiMax is here and now," Sievert said. "And LTE was not when we began building our network."
Indeed, carriers that have said they will use LTE to build their 4G networks will not have a network commercially ready until later in 2010 or 2011 at the earliest.
By using WiMax, Clearwire, and its partners Sprint, Comcast and Time Warner Cable, have given themselves at least a year to two year head start over their competitors. Clearwire is starting 2010 with 25 4G wireless markets up and running. Its network is available to about 30 million people. By the end of this year, it expects to be in 100 markets with the potential to serve 120 million subscribers.
By contrast, Verizon is hoping to reach 25 to 30 markets and 100 million potential customers with its LTE-based 4G network by the end of 2010 with more cities to be added the following year.
Still, even with a head start, neither Clearwire nor any of its reseller partners are lighting the world on fire with new subscribers. During the second quarter of 2009, it added a total of about 12,000 new subscribers. It added about 173,000 new subscribers in the third quarter bringing its total subscribership to 550,000. This figure includes consumers who have signed up for service via Clearwire's reseller partners, Sprint, Comcast, and Time Warner Cable. It also includes customers who had already signed up for Clearwire's pre-WiMax service that offered fixed wireless broadband.
New products, such as Sprint's new 3G/4G Overdrive personal Wi-Fi router could help. A slew of new laptops with Intel chips supporting Wi-Fi and WiMax are also expected to hit the market this year. In an interview with the Financial Times, Clearwire CEO Bill Morrow said the company plans to launch a dual-mode 3G/WiMAX smartphone in the second half of the year.
What's more partners, such as Sprint, are also reducing the price of the service by $10 to $59.99 per month.
So why should consumers care whether Clearwire uses WiMax to build its network or LTE? Clearwire executives say it doesn't matter much to subscribers.
"Consumers don't care which technology you use," Sievert said. "They want a robust mobile broadband experience that is fast and reliable."
This may be true to an extent, but once Verizon, the nation's largest wireless operator, and AT&T the nation's second largest wireless operator launch LTE-based 4G networks, and international carriers like Vodafone and Telefonica, which operate in several countries, also turn up LTE networks, the type of technology that is used will matter.
The reason is simple. Consumers want access to latest and hottest devices. They want these devices at an affordable price, and they want to be able to take them to other networks. But manufacturers will be driven to develop products that address the widest possible market. And large volumes of products using a given technology tends to lower prices.
Not the first time
U.S. wireless customers have already lived through a dual wireless network market. Verizon and Sprint have built networks using CDMA, while AT&T and T-Mobile have used GSM. The result has been frustrating for many consumers. For example, most Verizon and Sprint customers are unable to use their existing phones when they travel abroad, because carriers in other countries use a different network standard. It's also the reason why AT&T and T-Mobile often offer more exciting and cutting edge devcies than either Verizon or Sprint.
For example, a main reason Apple's iPhone was first introduced on AT&T's GSM-based network is because the GSM standard is what is used throughout most of the world. Apple was able to easily adapt the U.S. version of the GSM phone so it could sell it throughout the rest of the world. This same rationale is likely what prompted Google to offer its initial Android devices on T-Mobile's GSM network.
As 4G wireless networks are deployed, devices, such as cameras, MP3 music players, eReaders, and handheld gaming devices, will all be 4G-enabled. Clearwire would be at a severe disadvantage if these new products were first developed for LTE networks rather than WiMax networks. And consumers, who buy these devices, will likely expect to take these gadgets to other networks in the U.S. and around the world.
It's a scenario such as this, when 4G wireless becomes pervasive, that could force Clearwire to adopt other technologies in the future. But Sievert claims the changes that will need to be made are not too daunting. He says that because the Clearwire network is built using IP, upgrading it to some other type of technology like LTE, will not require much effort or expense. In fact, he says it's more likely the company will simply add more radios to its existing infrastructure.
"We have built a network that is all IP to the radios," he said. "So there is only a small portion of the network that deals with modulation. So we won't need to rip out anything and replace it. We would likely be able to add more technologies as we need them in the future."