Benjamin Wolff, chief executive of Clearwire, talked with Forbes Magazine about their EchoStar/DirecTV deal and the upcoming 700 MHz auctions:
Forbes.com: Clearwire now provides wireless service covering 10.1 million people in the U.S. but has only 258,000 subscribers. While service is new in many of these areas, what do you have to do to get new subscribers to join in big numbers?
Wolff: Right now the growth that we’re seeing where we get to 20% penetration, or one in five homes, covered in our older markets, is all solely driven by the residential gateway service [large cable modem-like device]. When you start talking about 20% penetration of homes passed, that’s more significant than any wireless carrier has ever experienced in that kind of timeframe. We expect these additional products [PC card and embedded WiMax chipsets in laptops to come later this year and next] will enhance that further. We haven’t quantified it. It’s a matter of seeing what kind of demand develops for the PC card and chipsets embedded in devices.
Forbes.com: The FCC is about to decide on rules for a prime band of spectrum that could help Clearwire and other third-party providers create a “third” pipe to challenge the dominance of cable and DSL in high-speed Internet. What is Clearwire’s position on the auction and do you plan to participate?
Wolff: The rules haven’t even been set yet. Without the rules being set it’s up in the air in terms of what blocks and channel sizes will be available. We haven’t made a firm decision one way or the other whether we will participate in the auction. We think it’s more useful in rural areas than urban areas. The wave form travels at longer distances at those lower frequencies and you have the potential to create self interference.
Forbes.com: Have you offered any comments on the proposals?
Wolff: We haven’t really weighed in. It’s interesting to see people talk about another network, because we’re building it today. I don’t understand all the political fervor of another network being built. We have been doing it for three years.
Forbes.com: What’s the future of WiMax chipsets in smart phones and other devices?
Wolff: Motorola and a few other PDA manufacturers talk about the possibility of having WiMax chipsets being embedded in the 2008 timeframe. So it may not be that far out, it remains to be seen. There are some prototype devices that are at trade shows that have WiMax chipsets. My gut tells me it’s more like 2009 before you see consumer electronic devices that have WiMax.
Forbes.com:The FCC wants a national high-speed Internet wireless network, but you maintain being regional is the path for Clearwire. Will you grow to be a national network like wireless phone providers?
Wolff: To the extent we continue to be successful, we’ll continue to build. We have enough spectrum to cover 120 million [people] across the country, a lot of that in the more major markets. We continue to acquire more spectrum on a weekly and monthly basis, so our spectrum footprint continues to grow. Today our ability to grow is only limited by where we have spectrum. With 200 million in Europe and 120 million plus in the U.S. we have a long road in front of us to keep expanding. Do we end up being nationwide? Most of the cellular companies have somewhere between 220 to 260 million people covered. Is it conceivable that someday we will get there? Sure, it’s conceivable.
Forbes.com: When will there be a nationwide wireless network?
Wolff: If we’re going to build 45 million by the end of the 2008 and Sprint is going to build for 100 million [in the same time period], that’s roughly half the country. By the end of 2010 you could see most of the country covered in a mobile WiMax network.
Forbes.com: Sprint Nextel has announced plans to use WiMax to roll out a new network that might reach 100 million people next year. How can Clearwire compete against this much bigger wireless network?
Wolff: At the end of the day, having two personal broadband networks built out across the country I don’t think is a bad idea. From a volume perspective, more people buying and selling WiMax equipment drives prices down, volume up, it’s all positive. It’s both helpful to have a big operator out there deploying, and it creates a competitor.
Forbes.com: After your stock opened at $27 in March it has fallen about 30% as expenses to roll out the mobile WiMax network are high. You have compared your business to McCaw Cellular and other cellular wireless operators in the 1990s. How are you similar?
Wolff: I think we’re on the same path. You can take a look at any wireless carriers from the ’90s, for example. Because they had a period of fairly significant investment, they incurred losses during that period but they came out of that like a rocket going up in terms of the profitability and valuation in the market. Today the market doesn’t quite know what to do with a company that has to invest for as long as we have to, but the similarities are uncanny.
Sprint’s plans to offer 2-4Mbps Mobile WiMax service for around $50 starting in 2008.
Verizon CEO, Ivan Seidenberg said at NXTcomm this week, “We’ll be ready for 4G by the end of the decade.” But he didn’t say anything about what specific technology the company might use for “4G”. Verizon’s EV-DO network currently covers 200 million people in the U.S.
A couple of different CDMA variants could become 4G networking technologies, says Unstrung. One of the most popular appears to be adaptive modulation MC-CDMA, which combines CDMA with multi-antenna Orthogonal Frequency Division Multiplexing (OFMD) for better radio performance in cities and other densely networked areas.
Forbes also has more on Broadband’s Big 700MHz Auction.
In related news, Google has launched a public policy blog. First item on their agenda is Network Neutrality. What’s not okay with Google? These would include:
- Levying surcharges on content providers that are not their retail customers;
- Prioritizing data packet delivery based on the ownership or affiliation (the who) of the content, or the source or destination (the what) of the content; or
- Building a new “fast lane” online that consigns Internet content and applications to a relatively slow, bandwidth-starved portion of the broadband connection.
[via Broadband Reports]
Related DailyWireless stories include; Clearwire & SatTV Do a Deal, FCC: Beltway Vs Valley, Clearwire Interview with WiMax.com, WiMAX World Europe, Nortel: WiMAX Train Leaving Station, WiMAX Roundup, Clearwire Mobile WiMAX Operational in Hillsboro, Mobile WiMAX - The Next Iridium?, Clearwire Gets Carded, Will Consumers Prefer WiMAX?, Clearwire Stock Price Down, Civil War in 4G, Nextwave Buys IP-Wireless, Nokia WiMAX: UK Tough, U.S. Litigious, Sprint’s WiMAX Cities, Beceem Chips in WiMax/Cell phone, Sprint: Nokia for Texas WiMAX and National Broadband: Fee & Free.
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