"LTE is going to have some disadvantages," says Bill Morrow, Clearwire CEO. Speaking to telecoms.com about the potential 'threat' from LTE in light of Verizon's plans to roll out the rival '4G' technology in 20 to 30 US markets by the end of next year.

Ken Wieland, Contributing Editor

June 4, 2009

3 Min Read
Clearwire CEO sees no threat from LTE
Clearwire CEO sees no threat from LTE

“LTE is going to have some disadvantages,” says Bill Morrow, Clearwire CEO. Speaking to telecoms.com about the potential ‘threat’ from LTE in light of Verizon’s plans to roll out the rival ‘4G’ technology in 20 to 30 US markets by the end of next year, he adds: “Verizon is going to launch with a pre-standard technology, so it’s not going to be very easy for the device and infrastructure manufacturers to create something in terms of scale. There is also the problem of converting pre-standard equipment [once the standard has been settled].”

Morrow sees a very different rollout strategy from Verizon compared with Clearwire. “As far as I understand it, Verizon is also looking to LTE to complement its existing service, to fill voids in its network. We are offering ubiquitous coverage in the markets we are launching.”

Morrow acknowledges that many mobile operators have said they will commit to LTE but, from his knowledge of working with many of them as a former Vodafone executive, he believes the overwhelming majority are in no rush to deploy. “If you actually drill down to why they want to go to LTE, it is more because they see advantages in economies of scale. A lot of investment has been made in 3G networks, and the likelihood is that they would rather not do anything with 4G for a while because they have major 3G investments to recover. The real demand for LTE is very different, I think, from the stated intent.”

Morrow believes that Clearwire is going to have “several years to be able to enjoy the benefits of being first to market”.

Clearwire launched its ‘Clear’ branded mobile WiMAX service in Portland, Oregon, in January 2009, and started launch in Atlanta last month.  The firm says it now has 500,000 subscribers in total (which includes ‘pre-WiMAX’ subs). Clearwire does not give a breakdown of how many mobile WIMAX subscribers it has other than to say that the Portland service is attracting subscribers at more than double the pace of any of Clearwire’s prior 51 market launches.

Access to capital could also be a problem as loss-making Clearwire moves into a more expansionist and capex-intensive phase. As of 31 December 2008, Clearwire had $3.1bn cash available, largely as a result of last year’s capital injection of $3.2bn in exchange for Clearwire equity from Intel, Google and three US cable operators (Comcast, Time Warner Cable and Bright House Networks). As of 31 March 2009, the cash pot had shrunk to $2.8bn.

Clearwire anticipates that cash spend for 2009 will be between $1.5bn and $1.9bn. Analysts at JP Morgan recently estimated that Clearwire faces a $2bn-$2.3bn funding gap, which will likely require tapping the credit markets in 2010, if not before.

Morrow has reiterated the firm’s aim of expanding mobile WiMAX service to 80 US markets and covering 120 million people by the end of 2010, but he has also acknowledged that the pace of rollout could change depending on the availability of capital.

About the Author(s)

You May Also Like