Clearwire targets 31 cities for LTE as WiMAX takes a beating

Clearwire(s clwr) said today it would roll out LTE in 31 markets in the first half of 2013, starting with New York City, San Francisco, Los Angeles, Chicago and Seattle. Though it didn’t detail any more launch cities, it’s not too hard to guess which ones are next. Clearwire has already said it will deploy LTE as “hot zones” in its existing 70 WiMAX markets. It’s targeting cities where demand for mobile broadband is greatest, so it will logically target the biggest cities in its current 4G footprint first.

While announcing its first quarter earnings on Thursday, Clearwire said it has identified the first 5,000 WiMAX cell sites it will upgrade to time-division-LTE (TD-LTE), a variant of LTE that uses the same frequencies for the uplink and downlink rather than splitting them into separate channels. It’s targeted 8,000 sites in total for the first stage of its build out, though it hasn’t announced any plans to expand beyond its WiMAX footprint yet.

Clearwire won’t be offering a complete network in those cities. Instead the hot zones will be used to augment its wholesale customers’ existing mobile broadband networks. That means Clearwire will become even more reliant on its wholesale business, a direction it has long been heading. Though it has largely shut down its own retail stores, Clearwire still sells Clear-branded modems and hotspots through Best Buy(s bby) and other resellers, as well as its online portal. Still, of the 11 million subscribers it had at the end of March, only 1.3 million were retail. The rest connected through Sprint(s s) and its other wholesale partners.

There are also some signs that its wholesale business may be flagging as well. Engadget reported on Thursday (and AllThingsD confirmed) that Best Buy is canning its Connect mobile broadband service in June after only selling 11,000 subscriptions. Connect has been utilizing the WiMAX service last year and was expected to be another major source of revenue for Clearwire beyond Sprint.

Clearwire did add 586,000 new connections in the first quarter, but the vast majority of them were Sprint 4G smartphones, a font that will soon dry up as well. Sprint has begun phasing out its WiMAX phones – though it continues to support and sell older devices – in preparation for its own LTE launch this summer. Eventually Sprint plans to tap into Clearwire’s new TD-LTE network, but that won’t be for at least a year. Luckily for the 4G operator, Sprint has decided to shift its Clearwire business to prepaid and will start selling Boost Mobile and Virgin Mobile WiMAX devices next quarter.