Clearwire to begin testing LTE, promises speeds of 20-70 Mbps

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WiMAX provider Clearwire (NASDAQ:CLWR) announced it will begin testing LTE network technology, and said that due to its massive spectrum holdings it expects to provide real-world LTE download speeds of 20-70 Mbps.

While Clearwire has in the past hinted at a possible, eventual move from WiMAX to LTE (the carrier earlier this year announced it renegotiated its deal with Intel to allow for a move to LTE), the company's announcement remains a dramatic action in the global march toward 4G technology. Clearwire has long been a poster child for the WiMAX movement, and the carrier's LTE announcement--coupled with similar, recent actions by the likes of Russia's Yota and others--serves as a high point in the global shift from WiMAX to LTE.

Clearwire said it will begin testing LTE network technology throughout the fall and into the early part of next year in Phoenix. Clearwire said it plans to conduct the tests "in collaboration" with Chinese vendor Huawei, and will also use the base station platform from Samsung that it currently uses for its mobile WiMAX network. The tests will run in Clearwire's 2.5 GHz - 2.6 GHz spectrum band, which the carrier said will support real-world download speeds of 20 to 70 Mbps.

"This is expected to be significantly faster than the 5-12 Mbps speeds currently envisioned by other LTE deployments in the U.S.," Clearwire noted in a not-so-thinly veiled attack on Verizon Wireless (NYSE:VZ), the nation's largest carrier that is gearing for a commercial launch of LTE later this year. Verizon has promised to provide real-world LTE download speeds of 5-12 Mbps.

Clearwire said it will test LTE technology in both TDD and FDD configurations. Clearwire said the Frequency Division Duplex tests will use 40 MHz of spectrum, paired in 20 MHz contiguous channels, which will produce download speeds up to 70 Mbps. (Verizon is working with 10 MHz channels in the 700 MHz band for its LTE buildout.) Clearwire said its Time Division Duplex test will run in a 20 MHz configuration, which the carrier noted is twice the channel size currently used in its WiMAX deployments.

As for devices, Clearwire said it will collaborate with chipmaker Beceem, and other, unnamed partners, to determine the "best methods for enabling end-user devices to take advantage of a potential multi-mode WiMAX/LTE network."

A final, tantalizing note in Clearwire's LTE release: "A number of large wireless operators are expected to participate with Clearwire on these (LTE) tests. Additional details about those companies are also expected to be disclosed at a later date." T-Mobile USA in recent months has confirmed it has had discussions with Clearwire for possible network collaborations.

Crowed John Saw, Clearwire's chief technology officer: "The 2.5 GHz spectrum band is universally allocated for global 4G deployments, so it has the potential to create one of the world's most robust ecosystem across billions of devices. We believe this commonality will result in a massive diversity of mobile devices and applications, at comparably low costs, due to unmatched economies-of-scale. In a 4G world, wireless coverage is important, but capacity is king. This capacity is a unique and sustainable advantage for Clearwire, thanks to our all-IP network and unmatched spectrum holdings."

And how will Clearwire pay for its LTE test and possible buildout? The company's CEO, Bill Morrow, said Clearwire would consider a number of financial options, including a sale of assets that would include spectrum not essential to its network buildout. However, Morrow pointed out that, if Clearwire does elect to move to LTE, the carrier would be able to use its existing backhaul network and core networks for the effort.

Clearwire executives wouldn't provide details on the cost of a possible LTE buildout, other than to say it would be "incremental" to the carrier's current spending on WiMAX. Carrier executives also reiterated Clearwire's intention to remain on track with its WiMAX buildout throughout the remainder of this year.

Clearwire's LTE bombshell coincided with the release of its second-quarter results, as well as the announcement of a new partnership with Cbeyond that will allow Cbeyond to resell Clearwire's WiMAX services as part of Cbeyond's existing voice and broadband Internet product suite for small businesses.

During its quarter, Clearwire reported net subscriber additions of 722,000 customers.

"As of today, Clearwire has more than one million wholesale subscribers and just under one million retail subscribers on the country's first 4G network," said Clearwire's Morrow. "By the end of 2010 we now expect to have approximately 3 million total subscribers, a significant increase from our previous guidance of just over 2 million subscribers. The pent-up wave of demand for mobile broadband service is evident, and Clearwire is riding our expanding 4G network and growing wholesale distribution model towards a promising second half of 2010."

Here are some details on Clearwire's second-quarter metrics:

Financials: Clearwire's revenue for the second quarter clocked in at $122.5 million, a 93 percent increase over second quarter 2009 revenue of $63.6 million. Clearwire's second quarter net loss was $125.9 million, and includes the impact of $79 million "related to inventory allowance increases and write-offs."

Subscribers: Clearwire ended the second quarter with 1.7 million total subscribers, consisting of 940,000 retail subscribers and 752,000 wholesale subscribers. During the second quarter, Clearwire added 722,000 total net new subscribers, including 127,000 retail additions and 595,000 wholesale additions. Clearwire said the jump in wholesale subscribers includes users "of multi-mode 3G/4G devices in areas where the company has not yet launched 4G service but from whom it receives nominal revenue."

ARPU: Retail average revenue per subscriber was $41.58 in the second quarter of 2010, up from $39.47 in the year-ago quarter.

Churn: Clearwire's retail churn reached 3.2 percent during the second quarter, up from the 2.8 percent it recorded in the year-ago quarter.

Capex: Clearwire's capital expenditures during the quarter reached $622 million, due to the carrier's WiMAX network buildout, more than double the $251 million the carrier spend in the year-ago quarter. And that spending will likely increase: "We're aiming to double the size of our network in the next five months," said Morrow, explaining that Clearwire hopes to boost coverage from 62 million POPs now to 120 million by the end of this year.

For more:
- see this Clearwire LTE announcement
- see this Clearwire earnings release
- see this Cbeyond announcement
- check out the FierceWireless Q2 earnings page

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