Clearwire, NetZero 4G and the coverage quandary

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Coverage has always presented a conundrum for wireless carriers as they struggle to cost-effectively deploy ubiquitous service. Must a carrier's network blanket a market where it claims to have service or is it sufficient to cover just a few parts of town? And in a country as large as the United States, how many cities should a start-up network try to serve?

I've been pondering these questions because a few weeks ago I received a NetZero 4G Mobile Broadband HotSpot device to review. In my original article, I described how NetZero, a low-cost Internet service provider, has become a data MVNO by launching a prepaid, low-cost, mobile broadband service that runs on Clearwire's (NASDAQ:CLWR) WiMAX network.

What I didn't mention was the fact that I haven't been able to test the HotSpot modem because there is no WiMAX service in the town where I live. Further, I couldn't pick up a signal when I took the device up the road to Boulder, Colo., where Clearwire is supposed to have coverage. I tried the device in front of two houses I used to own, a park near the University of Colorado and a place where I do volunteer work, but the display constantly showed "4G status: Searching."

Katherine Boehret of the The Wall Street Journal also got a NetZero 4G hotspot modem to test. Her review experience was similar to mine, in that she struggled to find a place to use the device. She wrote, "My home in Washington, D.C., doesn't get NetZero's 4G mobile broadband coverage, but a coverage map shows it works a half-block away. A colleague's house in Maryland had coverage but coverage wasn't available two blocks away, according to the NetZero map. I had better luck at my office near the White House."

I admit that I felt better after reading Boehret's review, because it proved that Clearwire's network coverage issues aren't limited to the backwoods of the West. What a relief.

Yet I still have the nagging feeling that these coverage gaps could be an issue for NetZero's customers, who will have to fork over $99.95 to purchase a NetZero 4G Mobile HotSpot or $49.95 for a NetZero 4G Stick. Even if a customer opts for NetZero's free monthly service package with 200 MB of data-- rather than, for example, the Platinum package with 4 GB for $49.95 a month--that's still not a good deal if there's no service to be had.

David Dowling, CMO at NetZero, told me the company is being upfront about its wireless coverage. People can sign up for the wireless data service by calling 1-800-NETZERO or by going to the company's website. He said operators at the toll-free number screen out potential customers who do not reside in Clearwire's 80-city coverage area and do not plan to travel to a coverage area. NetZero also encourages potential buyers to examine the coverage map on its website for the places they're likely to try using a NetZero 4G device.

"We try to make it very clear for folks both through the phone and on the web, so they can know the 80 cities where we have coverage and drill in specifically to areas where they may be using the product," Dowling said.

Indeed, after my failed attempts to use the HotSpot modem, I came home and checked NetZero 4G's online map, which clearly showed that I had managed to visit four neighborhoods around Boulder that sat smack dab in areas where Clearwire's network has service gaps.

I also visited other operators' websites and saw that Verizon Wireless offers LTE coverage in Boulder at the locations I frequent, while AT&T offers only HSPA. But unlike Clearwire, both Verizon and AT&T provide backup coverage with legacy 2G and 3G services, whereas Clearwire has no backup. With Clearwire, you either have service or you don't.

I find it a bit counterintuitive that a potential user has to have Internet access in order to access a NetZero 4G or Clearwire online coverage map in the first place. But Dowling told me it's important to note that NetZero's 4G Mobile Broadband is envisioned as a mobile supplement to someone's fixed broadband service at their home or office, so it's assumed they would have access to the online coverage map.  

NetZero is pushing its mobile data service via a high-profile public relations campaign and multimedia marketing in major markets. Dowling assured me that although NetZero is not offering a money-back guarantee, if someone buys a NetZero 4G device and truly never manages to find a signal, meaning there are no users showing on the device, the customer can contact the company for a refund of the purchase price.

When I wrote my original article about NetZero 4G, someone with the moniker Maschwar77 commented on the FierceBroadbandWireless website, "It would be great except no coverage in Phoenix." That validates the stance that consumers are bright enough to figure out where they can get NetZero 4G service.

But how long will Maschwar77 have to wait to get coverage for the current crop of NetZero 4G devices? The answer is a long time (till the end of time might be more accurate) as the NetZero 4G devices on offer work only on a  WiMAX network, and Clearwire is more focused these days on migrating its business to TD-LTE rather than building out WiMAX.

I'm still determined to try out my NetZero 4G Mobile Broadband HotSpot, even if I have to drive an hour into downtown Denver to pick up a signal. But I remain concerned about how the service's coverage gaps will impact the average consumer, who may not understand that WiMAX coverage is not equivalent to more ubiquitous cellular service.

Maybe I'm overwrought over nothing. It could be that geographic coverage doesn't matter much, especially when it comes to a low-cost device and service. And perhaps John Q. Public really is savvy about wireless service coverage. What do you think?--Tammy