Close of Clearwire Deal Good News for Wireless Broadband

Carl Weinschenk spoke with Bob Perez, a mobile broadband analyst with IMS Research.

Weinschenk: What does the completion of the Clearwire/Sprint deal mean?
Perez: During the next two to three years, the cities covered will be Chicago, Dallas, Philadelphia and Providence. I do think it will be an organic rollout, with the heavily populated areas first and then more regional coverage. They are working in Boston and Baltimore. I understand it is going well. I haven’t heard too much about how deployments are going. There have been delays in the Chicago launch. I am not sure what the cause is.

Weinschenk: So the combined company is in a relatively strong position.
Perez: It puts them in position to more aggressively carry out plans laid out by the Xohm network. Now that the deal is finalized, there is nothing up in the air. It allows you to move forward. The brand name Xohm will be phased out. Things are shifting to the Clear brand name. What won’t shift is the branding of the existing fixed WiMax connections. Eventually they will, but in the short term they will be marketed under the Clearwire brand.

Weinschenk: How will this look going forward?
Perez: Any mobile WiMax network in the U.S. from the new joint venture will be branded Clear. Fixed WiMax networks, not just in the northeast — they do have some networks in other areas — will be Clearwire. Right now, the fixed connection types are pre-WiMax. They are in the process of upgrading the networks. When they finish, they may look to rebrand.

Weinschenk: What does the closing of the deal say about the larger wireless broadband sector? Is it a bit of a milestone?
Perez: When you put wireless broadband networks in perspective, WiMax is one element. GSM operators like AT&T continue to upgrade through the UMTS path to HSPA+. I think WiMax has a slight edge in speed. Clear will be good in individual cities in the short term, for instance. 3G networks have a coverage advantage. They will continue to evolve their networks to compete with Clear.

Weinschenk: Will it come down to LTE versus WiMax?
Perez: During the call, Clearwire CEO Ben Wolff said he is open to looking at LTE as possibly coexisting with WiMax in the network. That would entail operating WiMax and LTE networks simultaneously. There are operators developing solutions for both. The technologies are very similar. The number I hear most often is that they are 80 percent the same. None of the vendors are developing dual-mode base stations, though. There is no history of cellular networks doing this. The closest equivalent is the similarities between UMTS and EVDO base stations. Dual products never came to market, and I have a hard time believing companies will combine WiMax with LTE base stations. That is not to say that it couldn’t happen. I just don’t think it’s very likely.

Weinschenk: So, if it is unlikely that dual-mode gear will be introduced, was Wolff just trying to be politically correct by mentioning LTE?
Perez: He was not necessarily trying to be politically correct. In the next couple of years, as LTE comes to market, they will keep their eyes on it and see if it makes sense to combine it with WiMax. It would allow Clear to take advantage of the economies of scale, and create a more robust ecosystem. He just wants to put himself in position as a wireless broadband company first and as a WiMax company second. Still, I think that they will move forward with WiMax and follow their WiMax plan, but want to leave the door open for other technologies.

Weinschenk: It seems that LTE is winning the perception war with WiMax. Why is this?
Perez: Right now, operators are just starting to deploy 3G networks and are starting to see ROI. As far as upgrading to WiMax, it really is not an idea that fits well with the timeline of operators as far as what they are thinking about in terms of an upgrade path. LTE is endorsed by the 3GPP and is the chosen evolution path for GSM operators, a big endorsement as well. The timeline and endorsements are the reasons they have the perception advantage over WiMax.

Weinschenk: So what are the prospects for WiMax?
Perez: WiMax’s strong suit is in the fixed market, as a fixed broadband solution for emerging markets and developing economies. That is really where it will take off. I think LTE will outshine mobile WiMax in the long run. I think WiMax was born as a fixed broadband solution. It kind of migrated down a mobile path. WiMax was not originally intended to serve as a mobile cellular service.

Weinschenk: What kind of timeline are we looking at for broadband wireless in general?
Perez: I think we will start to see near-DSL speeds across a fairly broad footprint in developed regions by 2015. That is when we will see an increasing volume of LTE and WiMax subscribers. It will take off when there are a lot more CPE devices available.

Weinschenk: What will the broadband wireless rollout look like?
Perez: I think initially and even through 2016, USB dongles and PC cards will dominate the market. This is not a voice service. Initially, it makes sense to put it in a card or in PCs. Once the market is seeded, then it will be more often seen in smartphones and other devices. In the next 10 years, we will start to see wireless broadband in digital cameras and video game systems and things like that. But there are lots of things that have to happen before you see it in those devices.

Weinschenk: How will the service provider segment evolve?
Perez: I think that really right now the big trend is convergence of communications providers. We are seeing operators that are traditional fixed-line for wireless and wireless start operating in the fixed area. An example is Xohm. One of its CPE devices is fixed. They are directly going after the fixed broadband market. It happened early on with cable and phone companies, when the Time Warners and Comcasts of the world started offering digital phone. This whole wireless thing is a continuation of that trend. Operators are trying to become one-stop shops for consumers. Eventually it will result in a bunch of quad-play operators.