Clearwire Could Add LTE to WiMAX Network
Clearwire, the nation's first 4G carrier and a standard-bearer for the WiMAX technology championed by the likes of Intel and Sprint, may be pondering a defection of sorts to the rival Long-Term Evolution (LTE) camp.
Company executives dropped the bombshell during their quarterly earnings call, saying they that they have changed the terms of their agreement with Intel, one of Clearwire's (NASDAQ: CLWR) largest investors, so the wireless provider is no longer bound to just the WiMAX technology. Under the original terms of the agreement, Clearwire had to use WiMAX exclusively until February 2012.
Now the company has the option of dropping WiMAX with 30 days notice or of adding new protocols to its network, such as LTE, the 4G (define) technology that Verizon Wireless, AT&T Wireless and T-Mobile are adopting.
Of the changed agreement with Intel, Clearwire CEO William Morrow said, "It does give us the flexibility that if you want to do a commercial launch on LTE or some other technology, that Intel would not be holding us back."
Morrow said there is "probably an 80 percent overlap of [LTE] and WiMAX," which would make such a migration relatively easy. His comments also suggested that Clearwire is weighing the possibility of adding LTE to its WiMAX offering rather than replacing it entirely, saying specifically that his company is looking into the cost of layering LTE on to its network.
"It's all about flexibility and focusing on what is here today, which, when you look at ecosystem, you look at the delivery, we are cruising down a very comfortable path right now," ," Morrow said. "And we're not going to lose the advantage that we have, so we'll keep evolving as we go forward."
Neither Intel not Clearwire returned requests for additional comment.
Clearwire, still in the midst of building out its national 4G network, had a pretty good quarter. It now has 971,000 total subscribers, adding 283,000 in the quarter, and now covers 50 million people total. Revenue was $106.7 million, a 72 percent increase over the $62.1 million from the first quarter 2009. However, the company is still losing money. It lost $94.1 million in the quarter, or $0.47 per basic share, not much better than the $98.7 million loss in the year prior.
The company announced plan to launch 4G mobile broadband services this summer in a number of cities, which includes Jacksonville and Daytona in Florida; Kansas City, Kansas; Nashville, Tenn.; St. Louis, Missouri; Salt Lake City; Merced, Modesto, Stockton, and Visalia in California; Wilmington, Del.; Grand Rapids, Mich.; Eugene, Or.; and Washington's Yakima and Tri-Cities.
Mobile analyst Gerry Purdy, principal analyst for mobile research with MobileTrax, said the move was an obvious one for Clearwire. "It may be inevitable over time, because LTE will be very popular, so it's probably a good idea to have that in portfolio," he told InternetNews.com
WiMAX is popular in many emerging markets, so it wouldn't make sense to drop it, Purdy added. But in the U.S., it's primarily being used as a wireless notebook connectivity technology and hasn't generally been thought of as a mobile phone technology, he said -- although there is a Clearwire handset in the works.
"They are thinking strategically about what 4G is as it evolves over the next 10 years, and I would say Clearwire would have a portfolio of technologies available and they will use whatever is necessary to bring quality of service to millions of customers," Purdy said.