Clearwire touts spectrum holdings, Softbank alignment

Clearwire's (NASDAQ:CLWR) extensive 2.5 GHz spectrum holdings have long been considered the struggling operator's ace in the hole and a major selling point for Softbank's recent investment in Clearwire partner Sprint Nextel (NYSE:S). Two new analyst reports commissioned by Clearwire reinforce that line of thought, highlighting the operator's Band 41 spectrum and growing global interest in its TD-LTE deployment path.

The reports lend credence to Clearwire's contention that its average of 160 MHz of spectrum in the top 100 markets puts it ahead of competitors in terms of bandwidth potential. The company has said it will start offering LTE with a 20 MHz channel and will use intra-band aggregation to combine that with another 20 MHz, eventually creating a 40 MHz pipe at every sector.

IDC's report notes there are numerous LTE spectrum bands available in the United States, including 700 MHz, cellular 850 MHz, PCS 1.9 GHz and AWS 1.7GHz/2.1GHz, which are all shared by a number of operators. "While there are advantages to having a combination of spectrum bands to address coverage and capacity requirements, the downside is that there is significantly less bandwidth within each individual band, creating limitations on throughput," said IDC.

Clearwire, however, possesses spectrum in a single bandwidth, the 2.5GHz to 2.6GHz frequency band known as 3GPP Band 41. The carrier holds in excess of 130 MHz on average, including 160 MHz on average in the top 100 markets. "As a result, Clearwire has the capability to generate much greater capacity and better network performance by virtue of a significantly fatter pipe vis-à-vis competitors," said IDC.

Speculation has swirled regarding just how important Sprint's investment in Clearwire is to Japan's Softbank, which is spending $20.1 billion for a 70 percent stake in Sprint. Clearwire President and CEO Erik Prusch added more fuel to the fire during Clearwire's quarterly earnings call last week when he touted his company's long history of working with Softbank.

"We have great respect for what they have accomplished with TDD-LTE and believe the commonality between our two networks, both in terms of the TDD flavor of LTE and the 2.5 GHz band, will continue to drive a productive relationship," Prusch said, according to a Seeking Alpha transcript of the call.

Softbank's investment in Sprint "is a clear sign that Clearwire's unmatched spectrum position makes us a significant and valuable solution to the industry's growing need for 4G network capacity," said Prusch, adding that Softbank and Clearwire "both have a deep appreciation for the data opportunity in the United States and the desire to leverage our network capabilities and fast data speed to be a disruptive force in the industry to drive innovation, rapid revenue growth and long-term shareholder value."

Sprint is Clearwire's most important wholesale partner and also intends to offload its FDD LTE data traffic onto Clearwire's TD-LTE network in the future. Sprint recently increased its ownership in Clearwire from 48 percent to 50.8 percent by purchasing about $100 million worth of Clearwire stock from Eagle River Holdings, the investment firm owned by wireless pioneer Craig McCaw. Yet despite its majority stake, Sprint does not control Clearwire, and, thus, neither does Softbank.

Clearwire and Softbank are co-founders of the Global TD-LTE Initiative (GTI), as is China Mobile. Since launching TD-LTE in February, Softbank has amassed more than 350,000 customers on that network, said Prusch. China Mobile, meanwhile, intends to expand its trial TD-LTE network to 200,000 sites in 2013.

China's Ministry of Industry and Information Technology (MIIT) recently announced it will dedicate the full 190 MHz in the 2,500MHz-2,690MHz for TD-LTE use, adopting the same Band 41 format advocated by Clearwire and Softbank.

Clearwire and other GTI members are pushing the view that TD-LTE is not a niche technology but one that is equal in many ways to the more widely adopted FDD flavor of LTE. "Device vendors' desire to reduce the number of models required to support different networks, traffic demand on mobile operator networks and global roaming partnerships will all align to show the true value of TDD spectrum and the importance of mobile networks supporting LTE TDD, either alone or in combination with LTE FDD," said ABI Research in its report for Clearwire.

Similarly, IDC predicts the wireless industry will soon begin focusing on a common platform in terms of devices for FDD-LTE and TDD LTE, "which will be key to integrating seamlessly and allowing handsets to offer TDD LTE at little or no incremental cost to FDD-LTE as a standalone option."

Yet it remains to be seen whether Clearwire has what it takes to make money from its spectrum holdings and TD-LTE plans. The perennially financially strapped company disclosed last week that it is undertaking a dramatic slowdown in its TD-LTE rollout.

Last month, FierceBroadbandWireless broke the news that Clearwire was reevaluating its TD-LTE plans and could elect to delay a portion of its deployment schedule. Last week during its quarterly earnings conference call, Clearwire confirmed it will significantly cut the number of TD-LTE sites it plans to deploy from 5,000 sites by mid-year 2013 to 2,000 sites. The company said that the reduction in TD-LTE sites was to better align its buildout with that of Sprint.

For more:
- see this Clearwire release
- see this Seeking Alpha transcript
- see this Kansas City Business Journal article

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