dailywireless.org » Clearwire’s $900M Payday

Clearwire’s $900M Payday

Clearwire has secured $900M in financing led by Intel Capital and announced the sale of NextNet Wireless to Motorola, reports ZDNet. Intel and Motorola said the moves were part of an effort to expand the availability of WiMAX.

Wednesday, Clearwire withdrew plans to proceed with a public offering of its stock. That could have raised as much as $400 million. Ben Wolff, Clearwire’s co-chief executive, said the decision was based on “fairly significant changes” to the company’s business brought about by Wednesday’s funding announcement.

Under the transaction, Intel Capital, which earlier invested in the company, will put $600 million more into Clearwire. That’s the single biggest investment for Intel Capital, ever.

Motorola Ventures is also buying a stake in Clearwire. Motorola will buy NextNet Wireless, which makes wireless broadband equipment, from Clearwire. “WiMax is coming, whether you want it, like it or don’t like it,” Motorola CEO Ed Zander said in a C/Net interview this May.

In Clearwire’s Securities and Exchange Commission filing in May, the company said it would use funds from a future initial public offering to expand its network and acquire more radio-frequency spectrum. The Federal Communications Commission is auctioning off slivers of 90MHz radio spectrum in the 1.7GHz to 2.1GHz bands.

Clearwire may bid for some of the 1,122 available licenses but could face competition from cellular providers, particularly Cingular and T-Mobile.

Clearwire was founded by cell phone pioneer Craig McCaw. It launched its first service in August 2004 and now serves customers in more than 200 cities and towns throughout the world.

Additionally, the three companies will cooperate on research, development and deployment. Motorola will sell NextNet equipment to Clearwire, and Intel will concentrate on squeezing WiMax chips into future notebooks.

Clearwire has launched wireless high-speed Internet service in 27 metro markets, covering more than 200 cities and towns in Alaska, California, Florida, Hawaii, Idaho, Minnesota, Nevada, North Carolina, Oregon, Texas, Washington and Wisconsin in the United States, as well as Ireland, Belgium, Denmark (under the Clearwire name with Danske Telecom) and Mexico (via partner MVSNet).

Clearwire and Nextel/Sprint are an effective WiMax duopoly. Sprint agreed to offer at least 15 million Americans broadband wireless access within four years. Under the terms of the FCC’s Sprint/Nextel merger deal, an additional 15 million potential subscribers need to be within range by 2011.

Sprint is also a cellular operator. It won’t compete against itself. That leaves Clearwire — an army of one.

BellSouth hopes to meet a goal of having 22 base stations deployed in the 2.3 GHz band by 2007 to comply with use it or loose it FCC rules. But that band is plagued with interference issues (next to satellite radio repeaters) and restricted capacity. The FCC has managed to reduce any further competition by making the AWS band a duplex (one channel up, one channel, down) play. That minimizes the advantages of CODFMA, MIMO and subchannel modulation found in Mobile WiMAX.

In 2004, the FCC changed the MDS/ITFS frequency plan. Commercial Broadband (BRS) and Educational (EBS) broadband services are now allocated differently. The television oriented EBS service was moved in the middle of the band to reduce interference with the weaker 2-way data services.

Home for Mobile WiMax will be the 2.5 GHz band (now called BRS) and ITFS (Instructional Fixed Television Service) (now called EBS). As of November 2005, over 1,700 BRS Licenses and 2,500 EBS Licenses (formerly ITFS) were listed on the FCC’s ULS License Search web site. The FCC’s Tower Search has additional information. Maravedis estimated the broadband wireless licensees (below), from the FCC’s ULS License Search web site.

Licensee	PSA	BTA	Potential Subs
BellSouth Wireless	36	6	9,070,577
Clearwire	59	24	4,693,347
Nextel/Sprint	268	198	157,519,832

Protected Service Areas (PSA) is an exclusive license service granted to either a BRS or EBS licensee. Each PSA is comprised of a 35 Mile Radius surrounding the licensed transmitter site.

Basic Trading Areas (BTA) is geographic region defined by a group of counties that surround a city as formulated by Rand McNally. There are 493 BTAs in the U.S.