Clearwire (NASDAQ:CLWR) customers apparently have an insatiable appetite for mobile data--the company's network usage increased 705 percent year-over-year in 2011. According to Clearwire CFO Hope Cochran, some of that increase came from Clearwire adding new customers to its network, but she attributed most of it to the fact that existing subscribers are using more data every month. "Customers are finding more applications and downloading more videos," she said.
During her appearance at the Goldman Sachs TMT Leveraged Finance Conference, Cochran said that her company currently counts 16,000 WiMAX cell sites deployed today, and about one-half of them carry 80 percent to 90 percent of Clearwire's network traffic. Clearwire plans to overlay its WiMAX network with around 8,000 TD-LTE cell sites--Cochran said the move would allow Clearwire to put LTE capacity in areas where its network usage is the greatest.
Interestingly, Cochran also talked about Clearwire's competitors and their LTE deployment configurations. She said that Clearwire estimates that companies that deploy LTE in 5 MHz of spectrum in the 1900 MHz spectrum band--which is what Sprint Nextel (NYSE:S) is planning to do--will only be able to carry about 5.6 terabytes of data on one site per year. For operators that are deploying LTE in the 700 MHz spectrum band in a 10 MHz by 10 MHz configuration--which is AT&T (NYSE:T) and Verizon's (NYSE:VZ) LTE deployment plan--Cochran said that they will be able to carry about 22 terabytes of data per site in one year. That amount of data, Cochran said, is equivalent to the amount of data Clearwire carries on its network today.
Cochran then honed in on the fact that Clearwire believes these operators will run out of capacity on their LTE networks very quickly, and will therefore quickly need to off-load their traffic onto Clearwire's network. When asked by investors how quickly Clearwire thinks the big operators will hit their capacity limits, Cochran said she thinks it will happen very quickly. "We see our own trends and that is the appetite for data is tremendous."
Indeed, in FCC filings Verizon Wireless has warned that its current spectrum holdings "will not provide sufficient capacity to meet the growing demand for mobile broadband--4G, in particular--by 2013 in some areas and by 2015 in many more."
Nevertheless, Cochran admitted that some operators may still opt to build more towers and implement cell-splitting techniques to eek out more capacity from their existing networks.
Earlier this month Clearwire inked a five-year wholesale agreement with Cricket provider Leap Wireless (NASDAQ:LEAP) that will allow Leap to buy capacity on Clearwire's forthcoming TD-LTE network. Financial terms of the deal were not disclosed.
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