2009 was a very big year for Clearwire, as the wireless Internet provider took its ambitious rollout of mobile WiMax from just two cities to nearly 30 markets.
After years of planning and false starts, a national 4G (fourth-generation) mobile data network began to take shape in the U.S., and in terms of launching commercial services, the rollout is on schedule. Clearwire, formed last year through the merger of a pre-WiMax service provider of the same name and Sprint Nextel's Xohm WiMax business, is in 27 markets now and has the capital it needs to reach 120 million people by the end of next year, according to Chief Commercial Officer Mike Sievert.
Clearwire offers wireless Internet access designed to work in homes and offices and go with users as they travel around within its coverage area. The WiMax service, called Clear, is advertised with speeds of 3M bps (bits per second) to 6M bps, though slower plans are available at lower prices. Regular rates start at $25 per month for 1M bps in a home and $45 per month for unlimited mobile access at 3-6Mbps, both with two-year commitments. Clear is available in major cities including Chicago, Atlanta, Las Vegas, Baltimore and Portland, Oregon.
Though majority-owned by Sprint and backed by Intel, Google and three large cable operators, Clearwire is, effectively, the cutting-edge startup of the U.S. 4G industry. Using a technology that came out of the data networking world rather than the telecommunications realm, Clearwire and its partners are taking on AT&T and Verizon for video, voice, data and mobile services. However, this year the company did bring in a new CEO from the mobile operator establishment. William Morrow, who replaced Benjamin Wolff in March, is a former CEO of Vodafone Europe and Vodafone U.K. (Wolff remains vice chairman.)
As it wrapped up the third quarter, Clearwire had about 173,000 subscribers to its WiMax service, with a total of 555,000 customers including users of its older, pre-WiMax offering. The company said it expected to sign up that many again in the fourth quarter alone, as commercial service launched in several more markets.
Those are still tiny numbers in the U.S. broadband industry, and Clearwire has had its share of stumbles this year. Many subscribers took to Web forums such as DSLreports.com to complain that their WiMax service had been slow and inconsistent, with frequent outages. Some complained to state consumer protection agencies that the service didn't perform as advertised and was difficult to cancel.
"The Clear salesman told me the service would work at my address. It did not. But when I attempted to cancel, they said I owed more money -- for a service they could not provide. I have asked for a full refund, but they refuse to provide that," Portland resident Paul Koberstein wrote in September to the Oregon Department of Justice. The department said every time it contacted Clearwire about a consumer complaint, the problem was solved promptly.
Clearwire's Sievert said the company provides a great service and is continuing to make it better. For example, the company is investing in new technology to help it more accurately predict how good service will be at a prospective subscriber's home, Sievert said.
"As we've built new cities, we've learned from our experiences in the prior cities, and that allows us to build a better network," as well as create good buying experiences, Sievert said. All Clearwire tech support is performed by the company's own employees, while sales and customer support are handled by mix of Clearwire and third parties, he said.
Working through the challenges of rolling out 4G has given Clearwire an edge over rivals that haven't done so yet, he said.
"I think it's one of the real advantages that we've got," Sievert said. "We're 27 cities into this, 30 million of the population into this, and we keep getting better and better."
Sievert said the company's biggest challenge has been carrying out the physical construction of its network, which is now live in locations ranging from Maui to Amarillo to Philadelphia and involves extensive use of microwave, a technology that hasn't been widely used in the U.S. before now.
"In addition to being a wireless service company, it turns out that we are a sizable construction company," Sievert said.
But Clearwire's hardest test may come next year. Verizon Wireless announced plans in February to launch commercial 4G service next year using LTE (Long-Term Evolution), a technology that a majority of the world's mobile operators have committed to rolling out over the next few years. AT&T plans to deploy its own LTE network in 2011, and this quarter it began to install a new 3G system called HSPA 7.2 (High-Speed Packet Access) with a theoretical throughput of 7.2M bps.
WiMax backers have long emphasized the technology's head start over LTE. The IEEE 802.16e standard on which WiMax is based was approved in 2005, whereas LTE is just now nearing completion. In fact, Sprint and Clearwire at one time said they would reach 100 million U.S. residents with WiMax by the end of 2008. They missed that date by far, partly because of management changes at Sprint, but the new Clearwire does have a meaningful head start over prospective LTE providers, analysts said.
In addition to having a commercial network online, there are numerous client devices already available for Clearwire's service, analyst Daryl Schoolar of Current Analysis pointed out. The company offers tabletop and USB modems, plus the Clear Spot, a device that lets users share the connection of a single WiMax USB modem via Wi-Fi. There are also more than 20 PCs from Dell, Lenovo, Samsung, Toshiba and Fujitsu that can be ordered with built-in WiMax modems. Only one of those is a netbook, but Clearwire expects more of these highly portable devices to work on its network next year.
However, Clearwire still needs to beef up its client lineup, Schoolar said. There is only one handheld device to use on the network: the Samsung Mondi, an MID (mobile Internet device) that runs Microsoft Windows 6.1. Clearwire's Sievert wouldn't comment on any other handheld products coming up but said WiMax handsets should be on the market in the second half of 2010.
At a minimum, Clearwire should integrate a WiMax modem in the Clear Spot, Schoolar said. Currently, users have to have a USB WiMax modem and plug it into the Clear Spot, which is a portable, battery-powered Wi-Fi router. Meanwhile, the company will need to keep the mobile hardware industry focused enough on WiMax to keep a stream of products coming after major carriers around the world adopt LTE, he said.
As for Clearwire's coverage issues, it's common for wireless performance to fall short when networks are first built, analysts said. Clearwire has so much radio spectrum -- 100MHz or more in most markets across the U.S., according to the company -- that it should be able to solve its performance issues over time, said Philip Solis of ABI Research.
Those spectrum holdings, along with the marketing and business plans of Clearwire and its service partners, will do more to determine the company's ultimate success than will the technical distinctions between WiMax and LTE, according to IDC analyst Godfrey Chua and others. The two technologies deliver essentially the same thing to consumers, who ultimately will make a choice among service packages from Verizon, AT&T, Clearwire and other operators for the usual reasons of price, reputation and convenience, they said.
"Those Betamax vs. VHS analogies do not apply," Solis said, referring to the way Sony's videotape technology for consumers was made obsolete by the incompatible standard used by other vendors. Consumers get online either way. For them, it's simply a matter of choosing between two different Internet services.