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Clearwire May Dump WiMAX

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Clearwire (s clwr) said today it’s changed the terms of an agreement it had with Intel (s intc), one of its largest investors, that could lead the way for Clearwire to dump WiMAX and switch to LTE. On its first-quarter financial results call today, an executive with Clearwire said the new terms allow either party to exit the agreement — which had until now forced Clearwire to use WiMAX through Nov. 28, 2011 — with just 30 days notice.

Clearwire did not announce a technology switch, but in response to questions from analysts, CFO Erik E. Prusch said that the overall ecosystem for 4G wireless was converging and as such, the market won’t have the technology wars in the future that it has seen in the past. Clearwire will “keep evolving as we move forward,” he added.

The technologies underlying LTE and WiMAX aren’t so far off as to make a transition from one to the other all that expensive in terms of the network costs, but devices that are currently running on the WiMAX network might need to be replaced if Clearwire implements a wholesale technology change on its radio network. Clearwire has so far been coy about the potential for a radio technology change.

In addition to the potential for Clearwire to move to LTE, its financial results were impressive. In its three most mature WiMAX markets, where it has 47 percent gross margins and 2.7 percent penetration, Clearwire said it’s taking about 18 months to get to profitability. It also said it’s reached 971,000 subscribers (it added 283,000 during the first quarter) and now covers 50 million people.

24 Responses to “Clearwire May Dump WiMAX”

  1. Bob Bobson

    LTE and WiMAX are different modulation standards using the same equipment, usually a firmware upgrade on the radios is all that’s needed to migrate from one to the other. Why one would be picked over the other I don’t know, licensing?

  2. Just wanted to point out that Sprint owns the majority share in Clear, making them the controlling interest. Sprint is rolling out its 4G WiMax network right now, so the likelihood they would allow this is slim to none.

  3. Charell Williams

    I think it’s great to follow the discussion on this site. I lost my job in Las Vegas in the wonderful hospitality industry. I am an independent sales rep for Clear and I read as much as I can about Clear. Alan, I think your summary of Clear and Intel modifying the Intel Agreement was great. I really think Clear will make a positive impact on the economy as well, with job creation, as well as household savings. Thanks for sharing the wonderful comments.

  4. Understand that Clearwire is focused on two markets. The fixed and mobile markets. Originally Clearwire was focused on providing DSL / T1 replacement using a point to multipoint Solution. then to provide to mobile users.

    The fixed application heavily favor a WiMax solution (pure IP handoff). WiMax is a great standard (it’s not a new technology, it’s a new standard and too many people don’t understand that). It has a strong following among the Wi-Fi generation (mobile PC device manufactures).

    Mobile devices lean to LTE because it’s capability to provide better indoor coverage and allows for back stepping to 3G, etc. Working with Clearwire in the past I can say they definitely do not position themselves with one technology or manufacture. They use a diverse amount of hardware. I don’t think they’ll dump WiMax by any means, nor do I think they’ll stick with just one technology!

  5. Stacey,
    I find it highly unlikely that Clearwire will dump WiMAX given that it has spent considerable capital to deploy it.

    And bear in mind that it may not be easy to upgrade older base station equipment to LTE and CPE/devices will also have to be swapped out as well.

  6. Good points, y’all. Perhaps I should have tempered my use of the word dump. But running dual networks seems more effort than Clearwire, which prides itself on being streamlined would really go for. Not sure what the overhead penalty for operating both would be given the technological similarities between the standards. The talk of convergence lends credence to the idea of a next generation LTE standard that is somehow compatible (harmonized) with WiMAX but that may be wishful thinking on Clearwire’s part.

    • I gotta tell you Stacey: That Headline was sensationalist and kind of unworthy of a professional briefing service. I just read the Clearwire report twice with underlining, and I did not in any way come away with any impression at all that they have any plans to abandon WImax.

      What was said can be summarized as follows:

      1) the Intel Agreement that locked in Clearwire to Wimax was changed to allow for a 30 day out. Reason, as more devices embed 4g Radios, and these transceiver sets (at both ends) look to be going multimode SDR, there is no need to lock in one partner to a RF data standard when both may need the agility to change to SDR or combined mode radios.

      2) The difference between LTE and WiMax turns out to be less a 15% difference in hardware, seen from a percentage of circuitry and costs to combine the RF transceivers.

      3) Clearwire can upgrade radios in the racks at the tower sites, and service mobile devices by upgrading the radios, running a dual technology in the same spectrum footprint, etc.

      4) WiMax is meeting all expectations, exceeding actually.

      Were do you get this dumping stuff? Is Om there to police the occasional clap trap and what sometimes appears a technological yellow journalism?

      • Alan, I’m sorry you felt mislead. As I said earlier, dump was probably too strong. I tried to link back to our coverage noting the similarities between WiMAX and LTE, but fundamentally I am skeptical of Clearwire’s desire to operate dual networks for any long period of time.

  7. It seems to me they are posturing for the market and letting partners know that they are not averse to being free and agile if the lock in becomes onerous.

    Meanwhile, more good news about the solidity of the WiMax RF channel, its robustness in multipath environments and resistance to transient S/N degradation.. It is just a great technology that has really fine legs under it.

    The spectrum, the open device connection policy, the great performance of Wimax, the uncapped data plan…finally, the customer satisfaction…my survey now covers returns from 500 verified Clear customers in 7 cities. I have not heard one performance based complaint yet that can be traced to a failure of the network or to an inherently fragile RF link. Customer service, too early to tell. But I have never seen such a cohort of happy campers. Good job, Clearwire.

  8. @Paul

    Because even if your WiMAX rollout is not a total failure by now all your suppliers have abandoned the technology – in the end you have an expensive Norwegian blue parrot at best.

    • @Rodolfo those same suppliers are building WiMAX and LTE gear — Moto, Samsung, Huawei — and future gear could have hybrid chips — so maybe the suppliers will ease the switch?
      And won’t WiMAX always be cheaper than LTE — or at least so for the next 3-5 years? (And if all you have to replace is the radios and not the expensive Cisco routers… )

      With nearly a million on the network now, that can still buy a lot of parrot feed…

  9. Why would they dump WiMAX when they can build the networks side by side?

    Seems like if LTE takes off they could keep the WiMAX network (and customers) running while offering LTE to new users. With all their spectrum and backhaul, not a stretch to run different networks should the need arise.

    Our take: