Mar 6, 2009 2:30 PM,

Clearwire’s WiMax plans call for little new building in 2009

By Kevin Fitchard

New Clear market launches already have Sprint-and Clearwire-built networks in place; major expansion to come in 2010

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This summer, Clearwire will launch service in Las Vegas and Atlanta, two markets which, along with Grand Rapids, Mich., and already-launched Portland, began building but did not launch last year. Later this year, Clearwire will flip the switch on Sprint’s original WiMax rollout, bringing Motorola’s Chicago network--which has been running as a trial since 2007--and Samsung’s Dallas-Fort Worth and Philadelphia networks online. Surprisingly Samsung’s Washington, D.C., network—also built in 2007—will stay dark until 2010. Clearwire will also upgrade its Motorola-built NextNet broadband wireless systems in at least three markets, Seattle, Honolulu, and Charlotte, N.C., to mobile WiMax in 2009.

The schedule seems tailor-made for the purpose of deferring capital spending until 2010. While the upgrade markets and newer contracts such as Philadelphia and Dallas may require capital outlays to fully deploy, much of the capital investments in the other markets was made last year. Motorola has already built a 600-plus base-station footprint in Chicago, and Clearwire has been running WiMax in the Casino core of Las Vegas for more than a year. Still Clearwire said it expects to burn through $1.5 billion to $1.9 billion in 2009, or around half of the funding infusion it received from Google, Intel and its cable investors.

Clearwire’s need to conserve cash is understandable; the longer its footprint and scale remain small, the more likely it is to face problems creating awareness about the new technology, Stifel Nicolaus analyst Christopher King said in a research note. And when 4G competition does arrive, Clearwire risks being overshadowed by the competition, King added.

“While the company is closing in on an inflection point in its network build and potentially large increases in subscriber growth, we believe the company will continue to be faced with operational challenges of marketing and selling a new technology, with a limited scale, at least initially, against what will likely be stiff competition over the next couple of years from national wireless carriers' 4G LTE networks,” King said. “Given the management track record at Verizon Wireless, download speeds achieved of between 50 Mbps and 60 Mbps in LTE trials, and Verizon's current 80+ million subscriber base, we believe Clearwire will face stronger headwinds as time passes.”