If you know nothing about wireless communication and want one sentence of advice on how to discern where the industry is heading, I would suggest this: Follow Craig McCaw. McCaw's Clearwire has about $1 billion in funds to build its own WiMAX network, and the company is eager to acquire spectrum and build new markets. The company now has but limited access to the 2.5 GHz licensed spectrum because Sprint owns or leases licenses covering 85 percent of the U.S. population. Ben Wolff, Clearwire's chief strategy officer, told Red Herring that "Building up a network like ours is very similar to building up a cellular network."
Clearwire was founded in October 2003 by Craig McCaw, the cellular phone pioneer who sold McCaw Cellular Communications to AT&T in 1994 for more than $11 billion. The capital available to the company may allow it to compete with incumbents such as Comcast and AT&T in the high-speed broadband Internet market. The company may also partner with satellite-TV companies who want to offer a bundle of video, voice and data to their subscribers.
Clearwire currently offers service in more than 200 cities and towns in the U.S., Ireland, Belgium, Denmark and Mexico. In the U.S., the company operates in the licensed 2.5 GHz band in places such as Jacksonville, FL; Modesto, CA; and Bellingham, WA. The company uses an early, nonstandard version of WiMAX, and the equipment for its network comes from its wholly owned subsidiary NextNet Wireless. Currently the speed of the connection is up to 1.5 Mbps. The company charges $30 to $37 a month for the service and $5 for the modem. Analysts estimate that the company has between 10,000 and 100,000 subscribers (the company is privately held, so it does not have to disclose the number of subscribers).
Even though this is a small number relative to the 95.5 million broadband users in the U.S., investments are pouring into the company. After the latest round of funding, Clearwire has raised $620 million in debt financing. In addition, the company received a $100 million investment from Bell Canada a year ago and another investment from Intel as well as from other sources, bringing total investments to about $1 billion.
For more on Clearwire's WiMAX strategy:
- see this Red Herring report