Clearwire Hanging Tough With 4G Plans
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Clear sailing for Clearwire? Despite the rough economic headwinds, investors are holding firm on their vision of network's future with the venture.
The $14.5 billion WiMAX project is a partnership between Sprint (NYSE: S) and Clearwire (NASDAQ:CLWR), with a total of $3.2 billion chipped in by Intel (NASDAQ: INTC), Google (NASDAQ: GOOG), Comcast (NASDAQ: CMCSA), Time Warner Cable (NYSE: TWC), and cable provider Bright House Networks.
The goal: offering customers high speed wireless connectivity that trumps Wi-Fi and other networking standards such as Long-Term Evolution (LTE), the 4G networking approach favored by Verizon Wireless.
WiMAX offers a transmission speed more than five times faster than current wireless networks. It lets users send huge data files from a smartphone, switch from a mobile phone network to a LAN without redialing, share documents in real-time video conferences and essentially transport all the benefits of an office's networked PC to conduct business on the road.
Clearwire, which offers advanced high-speed Internet services, is building what might be called a counterpoint to LTE called Clear, a nationwide WiMAX (Worldwide Interoperability for Microwave Access) network. It plans to deploy in most of the top 100 markets by next year.
It's a lofty goal, with a lofty investment price tag and some lofty charges thus far. But despite the recession, the Clearwire gambit is rolling on.
Industry experts expect Clearwire to roll out service in Atlanta and Las Vegas this year. Yet while Clearwire and partners have pledged hefty commitments, both Clearwire and Sprint acknowledge another $1 billion to $2 billion will be needed for network completion.
That's on top of recent charges by Clearwire's major backers in recent earnings releases.
Google recordeda $355 million impairment charge tied to its $500 million investment. Intel recordeda writedown of $950 million and Time Warner recordedimpairment charges of $367 million. Comcast recorded a $600 million pretax impairment.
Sprint, which has a mobile virtual network operator arrangement that will allow it to resell the 4G services under the Sprint brand name, reported fourth quarter and full-year 2008 capital expenditures of $90 million and $560 million, respectively, related to its WiMAX investment.
The 51 percent Clearwire owner, which kicked in spectrum and WiMAX-related assets for a Clearwire investment valued at $7.4 billion, had a rough 2008 fourth quarter.The third place wireless carrier announced 8,000 job cuts, or 14 percent of its workforce, at the start of this year.
Sprint had previously told InternetNews.com the layoffs will not impact its WiMAX network support.
Other partners are hanging in. "Our [Clearwire] support is clear and our commitment remains as strong as it was at the start," Intel spokesperson Suzy Pruitt told Internetnews.com today. She confirmed Intel's $1 billion investment so far.
"There is a misconception that because additional monies are needed that the WiMAX effort is at a standstill but it's absolutely on track," Pruitt said.
Intel officials have noted that Samsung and Toshiba are on target to deliver new Centrino-2 processor powered notebooks with integrated Intel WiMAX Wi-Fi technology in the next few weeks. The two join a long list of supporters including Acer, Asus, Dell, Fujitsu, Lenovo, and Panasonic. Intel said 26 PC models are certified and that it expects 100 models by year's end.
Clearwire, which told InternetNews.com it will provide a network deployment update during its earnings call on March 5, said the project funding is strong. "There is substantial funding to support our build plans well into the future," spokesperson Susan Johnson said.
Google told InternetNews.com it remains supportive, but would not comment on any future investment pledges. "This investment made sense for us at the time we made it, and it continues to make strategic sense for us now," Google spokesperson Andrew Peterson said. "Google benefits from a healthy, open Internet, and this investment reaffirms our commitment to promoting open access to the Internet for more people in more places."