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Semiconductor industry

Clearwire's WiMAX Future in Jeopardy as Company Considers LTE Switch

Strategic Insights

— 2 min read

Clearwire, the mobile broadband service provider, is facing increasing pressure to switch from its current WiMAX technology to Long-Term Evolution (LTE) technology, used by major cellcos. The company's president, William Morrow, has indicated that Clearwire could easily switch from WiMAX to LTE, citing the technology's similarities and Intel's investment in both standards. This move would likely be in line with major cellcos, including T-Mobile and AT&T, which have committed to deploying LTE as their 4G wireless broadband technology.

Clearwire's financial situation also plays a significant role in its potential switch to LTE. The company has already raised $3.2 billion with WiMAX partnership deals, but faces a potential $3-5 billion shortfall to build out its networks. Morrow has stated that the company will need to raise an additional $2 billion to complete its rollout, after which it will be cash-flow-positive. This financial burden, combined with the competitive landscape and Verizon's aggressive LTE deployment, puts Clearwire in a precarious position.

Key Takeaways:

  • Clearwire is considering switching from WiMAX to LTE technology due to the technology's similarities and Intel's investment in both standards.
  • Major cellcos, including T-Mobile and AT&T, have committed to deploying LTE as their 4G wireless broadband technology.
  • Clearwire's financial situation is precarious, with a potential $3-5 billion shortfall to build out its networks.
  • The company has already raised $3.2 billion with WiMAX partnership deals, but needs an additional $2 billion to complete its rollout.
  • Clearwire's strategy involves targeting mass-market consumers and small businesses, with its cable company investors targeting their pay-TV and broadband subscribers with bundles of services.
  • Sprint Nextel, a 50% non-controlling shareholder of Clearwire, will focus on sales to large businesses.

Statistics:

  • Clearwire plans to deploy its services to 120 million POPs in 80 markets by the end of 2010.
  • The company has already raised $3.2 billion with WiMAX partnership deals.
  • Clearwire may need an additional $3-5 billion to build out its WiMAX networks.
  • Verizon has said it will have its LTE network operating in 30 markets with a total population of 100 million by the end of 2010.
  • AT&T's 3G network upgrade will increase download speeds to 7.2 Mbps.
  • There are 49 WiMAX networks with 28 million POPs in operation or under development in the US and Canada.

Sources:

  • Dow Jones News Service
  • Wireless Week
  • Maravedis (report: "Sizing up the Competitive Opportunities for Verizon (LTE) and Clearwire (WiMAX)")
  • The Wall Street Journal
  • WiMAX Forum

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