Is Clearwire's Only Option: Sell to Sprint?

13 thoughts on “Is Clearwire's Only Option: Sell to Sprint?”

  1. I was telling everyone 2 years ago that WiMax was a dead-end. It’s a big-infrastructure technology (ie it requires a really big roll-out) without enough big-provider support. LTE just had too much momentum 2 years ago, and it’s even worse for WiMax now. I told you so.

    Here’s my next prediction: Sprint is in big trouble because they haven’t been working on an LTE transition the way Verizon has. Verizon is the biggest fish in the CDMA2K pool now and they’re the only reason Samsung, LG, etc make price-competitive CDMA2K phones at all at this point. Once Verizon begins migrating customers off CDMA2K and on to Volga-enabled LTE, the CDMA2K wholesale market for handsets is going to get much smaller and much harder to justify selling to for handset makers.

    Better start looking into LTE, Sprint.

    1. I see it differently:
      1) LTE will no doubt be huge, but I don’t know how you attribute 2 years worth of zero deployment to huge momentum.
      2) Sprint/Clear has said more than once that they could transition all or part of their WiMax network to LTE with a software/firmware change.
      3) Samsung and LG are both Korean – and there are 316 million CDMA subscribers in Asia. Do you really think they will be abandoning CDMA handsets quickly?
      4) Verizon had 92.1 million customers as of Q2. How quickly do you suppose they can transition all of them to a voice standard that isn’t even supported yet on their own LTE network? (2 years, minimum).
      5)Consumers don’t care about wirless protocols nearly as much as tech bloggers and EE’s think. Pricing and throughput will be what matters, and both (along with T-Mobile’s HSPA+) are all fairly competitive today.

      Back to the topic at hand – as majority shareholder, Sprint gets to decide, don’t they?

      1. 1) Is there a single new carrier in the last 2 years who has announced a WiMax rollout?
        2) I hope they can get more UMTS spectrum with a firmware upgrade too – Clearwire’s network has been stitched together from unconventionally-licensed 2.5GHz spectrum in the US. LTE phones suitable for use on Clearwire spectrum would probably be, at wholesale, expensive one-offs, much like CDMA2K phones will be as soon as Verizon begins the big push to LTE.
        3) a) Just about every major CDMA2K carrier in the world (minus KDDI), including SK and KT, is either transitioning or has transitioned to UMTS or LTE. Of the transitions that I’ve witnessed, they pretty much stopped selling CDMA2K subsidized phones immediately – at least for smartphones and feature-phones. I don’t know how SK or KT will do this.
        3) b) With Verizon out of the business of selling CDMA2K phones (versus supporting them) the biggest customer for smartphones and feature-phones will be gone from the CDMA2K business – the rest is low-rent business in China and SE asia.
        4) Again, of the transitions I’ve seen in Australia and Canada, the carriers were pretty determined to stop selling CDMA2K phones – especially at the high-end – to customers. Verizon will make this work as fast as they can. Can Sprint transition to LTE in 2 years to avoid getting sucked-down below the waves with the rest of the CDMA2K wreck?
        5) No – actually throughput only matters to USB stick customers – everyone else cares about price and handset availability (ask anyone trying to get an iPhone on Verizon). And when all of Sprint’s handsets are all CDMA2K one-offs that cost them a good 25% more at wholesale than what Verizon and AT&T are paying, with no material gain for customers, it isn’t going to end well.

      2. Ted, if you look at Sprint’s “Network Vision” that they released information on at the beginning of last December (2010), you’ll see that they are priming their network for whatever might happen. Their new network build out will allow them to offer any service on any spectrum they own. That means they will be able to have CDMA/iDEN/WiMax/LTE in whatever combination they need to and on whatever frequencies they choose and they’ll be able to do so dynamically – switching on demand with software. In addition, there is no reason to worry about CDMA handset selection. Verizon isn’t even planning to start switching to VoLTE until 2012 or 2013, depending on the evolution of a Voice over LTE standard, and regardless of what Verizon does, China Telecom is about to hit 100 million CDMA subscribers and is expected to upgrade their network to EV-DO Rev. B and they are said to be negotiating for the CDMA iPhone. CDMA makes sense at this point from a cost perspective for a lot of organizations. I honestly am not worried about Sprint – despite the hyperbole and fear mongering of the media they have quite a few options left before they collapse.

  2. I like that you call Clearwire an “innovator,” Om. Too many people are reluctant to admit that networks are the products of innovation as much as ground-breaking advances like Farmville are; maybe even more.

    I think the question that Clearwire’s troubles raise is whether a fixed location wireless service can ever really compete with DSL, cable, and FiOS for residential broadband. The FCC’s new net neutrality rules really slam the fixed wireless providers. They need the same engineering freedom that mobile enjoys under the new rules but they’re bound to the same conditions as wireline operators.

    It probably also means that Clearwire’s spectrum holdings are too valuable to spend on fixed location services.

    1. @Richard +1 “Too many people are reluctant to admit that networks are the products of innovation as much as ground-breaking advances like Farmville are; maybe even more.”

      I’ve been rooting for WiMax for a long time. Unfortunately, Sprint and Clearwire did a terrible job of executing on some truly excellent spectrum and a groundbreaking technology that could have been the WiFi of long-haul RF.

      In my fantasy world two years ago, this is what Clearwire would have done from the beginning:

      -offer an unlimited all-you-can-eat 4G plan

      -let any device OEM on the network after some quality control, starting with laptops and mobiles and then migrating broader device inclusion – tablets, in-automobile receivers through the big automakers (radio is most listened to in the car), M2M, etc.

      -hook up with Boingo, and other WiFi Networks, Starbucks and the home-networking mfgrs for seamless fixed mobile convergence (FMC) when possible; make VOIP on UMA handoff in the home and outside seamless

      -offer a completely open API so the web guys could go out there and create enticing apps for endusers and use it as a testbed before the LTE networks were unleashed

      Now it might be too late, but if Verizon is charging with bucketed tiers during a recession, Sprint/Clearwire might just be able to innovate by playing the “dumb pipe”.

      Clearwire really was a startup and they should have acted more like one by doing everything they could to get users on board en masse. Instead, they started life by focusing on stationary WiMax for the last-mile; a terrible market because its largely poor and because it gets no media love due to few savvy technology addicts living in Montana or Maine. I still hope something good comes out of it.

      1. Those are some pretty good ideas, but you can’t open the pipe up to diverse applications without using the smart pipe features that are builtin to WiMax, and I don’t think you’d want to from a business perspective.

        Clearwire bought into the idea that consumers are miserable with the wireline duopoly when most of them really aren’t at all dissatisfied. With cable going DOCSIS 3, and AT&T and VZ pulling fiber, another fixed-location service doesn’t have a business case except in the niches, and it’s certainly not a good system for Netflix to exploit.

        The post mortem will probably say they were squeezed for backhaul, but I wouldn’t be surprised if customer acquisition turns out to have been much more expensive that budgeted.

    2. “Those are some pretty good ideas, but you can’t open the pipe up to diverse applications without using the smart pipe features that are builtin to WiMax, and I don’t think you’d want to from a business perspective.”

      – I was suggesting that all of the smart innovations that 802.16e (mobile WiMax) has on the core WiMax (802.16) *should* be turned on such that the application makers can take advantage of an open, mobile IP network. — You are right that when comparing to the other network operators, the unlimited pricing would look like Clearwire/Sprint is shooting themselves in the foot, but I think that’s precisely where they can be innovative and actually cause some churn in the houses of their competitors. By letting end customers know their bill won’t go beyond a certain amount and by enabling all the web developers that have so much customer attention promote their mobile apps across the Internet, they would create a ton of good will and free marketing respectively.

      – Although I agree that when Clear initially launched, there was significant competition from the saturated broadband ISP space (cable/DSL), new cable penetration and fiber is actually very low. Cable is losing customers by the hundreds of thousands every quarter (a recent phenomenon) and from my understanding fiber actually never took off with AT&T U-verse and Verizon only lays out small amounts of fiber where they know it will have decent adoption (extremely limited). For Clear, now might actually be a good idea to to promote a double-play all you can eat (in home and mobile).

      – Are you suggesting that it’s bad if Netflix exploits an all-you-can-eat system? For Clear, the Netflixes of the world could be their new customer prospect list, and what they pay for streaming could a part of the new customer acquisition cost. Just like any other all-you-can-eat package, they should have an asterisk somewhere making sure the super hoards don’t take advantage of the network.

      – I’ll go so far as to predict the reason why Verizon Communications and Verizon Wireless is still psuedo separate/awkwardly structured is purely for tax optimization. Eventually, the fiber VCommunications started laying out to increase their coverage, the number of homes they “pass”, will eventually be used for backhaul for a stronger LTE network for VWireless. For consumers and many small businesses, we are only a couple of years away from a purely wireless world inside and outside of the home.

  3. Working as a supplier of radio equipment to Samsung for Clearwire’s an UQ’s WiMAX networks, we have been expecting that it would take up to 10 years for WiMAX to be commercially viable.

    Yet, in the last 5 years, it seems the Clear’s attention had been on deployment and not so much marketing. During that time, we’ve been on-and-off, eternally waiting for a “clear” direction from Clear. Its future is doomed if it continues this way.

    Conversely, UQ Communications, although started later, has deployed its network in a little over 2 years, with less spectrum, and is now marketing aggressively. Its build-it-and-they-will-come strategy is nothing new but at least it has one.

    As for marketing, there must be that magic widget that satisfies the eyes and ears of the users. I think the focus should be on upload more so than download. And, target the industrial and commercial markets as opposed to the consumer market. For example, having WiMAX enabled video cameras would eliminate the need for big news vans with satellite dishes.

    Without a major paradigm shift, I think offering wireless broadband, LTE or WiMAX, is simply more of the same thing.

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