Clearwire Embraces LTE As WiMax Strategy Continues To Produce Huge Losses


Credit: Clearwire

It’s pretty clear that Clearwire’s bet on the Wimax wireless networking technology is not paying off. The wireless carrier announced plans Wednesday to build a network using a popular 4G cell-phone network technology that competitors have embraced wholesale, amid another quarter of heavy losses.

The picture has been grim for Clearwire (NSDQ: CLWR) over the last six months, a period in which it has lost hundreds of millions and its CEO. And things haven’t gotten much better since: even though revenue and new subscribers grew sharply, something called “reported net loss attributable to Clearwire (including the effect of discontinued operations)” was $168.7 million, worse than the same period last year by 25 percent. When you have to report six or more different metrics corresponding to profit and loss to try and describe how your company performed over the last quarter, you know there’s a problem.

Clearwire’s main problem is that building wireless networks that cover major metropolitan areas in a country as big as the U.S. is a very expensive task. And the mobile industry has almost completely settled on LTE as the standard for advanced wireless networks (Sprint’s deal with LightSquared for LTE coverage probably serving as the nail in the coffin), meaning that device manufacturers and network equipment makers who hadn’t forgotten about WiMax already are likely to do so over the next year or so.

So LTE support is really the only way forward for Clearwire, but it’s hard to imagine how it will be able to build out a competitive network against rivals who are way ahead of while it’s losing hundreds of millions of dollars a quarter. This is probably the end for WiMax, which was pushed aggressively by Intel (NSDQ: INTC) during the last decade but was dismissed by all the major wireless telecom companies in the U.S. save Sprint.

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