Sidecut Reports

(Editor’s note: The following is an excerpt from our latest report, Inside Clearwire: A Network Report, which looks specifically at Clearwire’s use of open core networking standards for its nascent national WiMAX broadband network. The full report can be downloaded FREE by clicking on this link.)

OPEN IN THE CORE MEANS COMPETITION AND SAVINGS

If you follow the cables down from the antennas on a typical “3G” cellular tower, they almost always end up leading into a building the size of a largish tool shed or a small garage — typically a 10-foot by 12-foot (or larger) enclosure that houses all the complex gear necessary to process, separate, administer and manage the phone companies’ mix of voice calls and data traffic.

Since Clearwire is building a data-only network, its tower-site infrastructure needs are much simpler than cellular. To house a typical Clearwire tower site’s power needs, microwave backhaul, WiMAX antenna gear and an Ethernet switch takes merely an enclosure the size of a large refrigerator, sitting on a 3-foot-by-5-foot space.

With far less gear than a comparable cellular site, Clearwire chief techincal officer John Saw said his network is not only obviously cheaper to operate but also more flexible, allowing for quicker and closer deployment toward its customer base.

According to both Saw and Barry West, Clearwire’s president of International operations (and the former head of WiMAX operations at Sprint Nextel before its merger with Clearwire), a typical WiMAX network is about eight to 10 times cheaper to build than a 3G cellular network covering the same area.

“Our average cost number per cell site, when you add in all the backhaul access, zoning costs and everything else, is less than $150,000 per site — and the real number is actually much lower than that,” Saw said. “You’ll never get a cell site at that cost for 3G. What we have done on the network side is the lowest cost approach we could get to.”

Inside its network, Clearwire also embraces an openness that will allow it to reduce costs by introducing a competitiveness not typically found in cellular networks. In the latest implementation of the WiMAX standard, there is a model that calls for true open interfaces between infrastructure gear, like base stations, radios, and administrative equipment like the Access Service Network (ASN) gateway, the workhorse box of a WiMAX network that aggregates and distributes a wide range of subscriber-related data, from session management information, billing data, traffic and mobility management, quality of service and other administrative functions.

In cellular 2G or 3G data implementations, Clearwire’s Saw said that a single vendor almost always provided all the different pieces of gear needed, often at a premium cost. “What we wanted to do with Clearwire was break the monopoly between the base station provider and the gateway provider,” Saw said.

To win a contract for Clearwire’s new IP-based network, however, means that vendors must comply with the open interfaces requirements. Bruce Brda, senior vice president and general manager of the wireless networks business at Motorola, said that opening up such internal interfaces inside a cellular network allows Clearwire to act as its own system integrator, which could produce cost savings and spur product innovation.

“These interfaces have never been open before — now the carriers like Clearwire have the ability to mix and match,” Motorola’s Brda said. “It’s great to have a clean slate, and to have the flexibility to pick the best vendors for the best elements. The downside is control, in how you manage and debug a disparate network. That’s a challenge.”

But Kittur Nagesh, director of service provider marketing at Cisco, said the positives outweigh the negatives when it comes to combining gear from different vendors.

“In some sense you can say Clearwire is now able to pick the best of breed to meet their specific needs,” Nagesh said. “Right now they have transport and Layer 4 to 7 gear from Cisco, and ASN gateways from WiChorus. When it’s done right you can actually combine the best of breed from multiple companies.”

For more on Clearwire’s network, download our latest report, Inside Clearwire: A Network Report, for free by clicking here.

Despite what you may have read in other online outlets, Clearwire Corp. has made no radical switches of late to its business plans, continuing on its current course of providing both retail and wholesale versions of its WiMAX wireless broadband service.

Company representatives contacted by us Wednesday seemed confused by an anonymously sourced report from the Taiwanese-focused website DigiTimes.com which claimed that Clearwire “has become conservative about its purchases of WiMAX equipment due to changes in the company’s operating policy, according to sources at Taiwan WiMAX CPE makers.” The report went on to claim that Clearwire was ditching its retail operations in favor of concentrating on wholesale operations. The DigiTimes report added: “The slow subscriber growth has pushed Clearwire to shift its policy, the sources asserted.”

Even though the DigiTimes report was anonymously sourced, of questionable veracity and included no comment from Clearwire itself, that didn’t stop other, more mainstream U.S. tech publications from repeating the report’s claims verbatim, also apparently without contacting Clearwire for comment. Wednesday, a Clearwire representative sent us a statement saying the company isn’t making any such radical business shifts:

Clearwire remains committed to our retail business through our company owned retail stores, indirect dealers and national retail outlets. We are also supporting our wholesale partners, Sprint, Comcast and Time Warner Cable, in their 4G offerings as we have been since they launched their first products in 2009. We’’ve been fully focused on developing both our direct and wholesale business since launching our 4G network more than a year ago.

DigiTimes, which bills itself as a “unique information source” on Taiwanese tech companies, does not provide an email or contact link for either of the report’s named authors. Clearwire is scheduled to report its Q4 quarterly earnings on Feb. 24, where watchers will find out whether the company has met its ambitious subscriber goals for the year-end period.

(Editor’s note: The following is an excerpt from our latest report, Inside Clearwire: A Network Report, which looks specifically at Clearwire’s use of microwave backhaul for its nascent national WiMAX broadband network. The full report can be downloaded FREE by clicking on this link.)

BACKHAUL: THE BACKBONE OF THE NEW NETWORK

Though its funding comes in chunks of billions of dollars, in the world of telecom Clearwire is a scrappy startup — an underfunded underdog that is forced to improvise and invent new rules to play against the telecom titans whose advertising budgets alone dwarf Clearwire’s yearly captial expenses. On Clearwire’s side, however, is an impressive swath of wireless spectrum, and the power of using open, standards-based Internet Protocol (IP) technology at its base to produce economies of scale and to promote competition among its suppliers.

“When you have no money, and you’re a small company, and you are desperate to differentiate yourself, you’d be amazed at what you can come up with,” said Dr. John Saw, Clearwire’s Chief Technical Officer who has been with the company since its inception — his bio notes that he was the company’s second employee hired. “The nice thing about Clearwire is that the first day on the job, I had no legacy network to worry about,” said Saw, a veteran of AT&T’s wireless operations before joining Clearwire. “Craig [McCaw] told me let’s not make the same mistakes that were made before.”

One of the places Saw and Clearwire started innovating right away — and this was starting when the company was launched in 2004 — was to figure out a better way to do “backhaul,” the term associated with bringing bandwidth from the Internet to the radio towers.

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There is just no ducking it anymore — AT&T has a real problem with its wireless network, and according to reports the company spent a good deal of time on its quarterly earnings conference call Thursday trying to convince investors and other followers that Ma Bell was ready to spend to fix the problems — $2 billion more throughout 2010, according to AT&T, bumping its yearly network capex spend to about $18 billion to $19 billion.

While we’ve reported on this song and dance before — AT&T talked about adding lots of backhaul at its developer day confab in Las Vegas the day before CES started — AT&T still can’t seem to bring itself to say exactly how bad its network problem is, but hey they are trying. Witness this slide from their investor presentation, which is supposed to make you feel good about how the progress is going:

I mean, the squiggly lines are all going in the right direction — but could anyone else but AT&T think they could get away with submitting a chart without numbers on the Y axis to clarify exactly what the hell they were talking about? Anyone think they could pass even an internal budget meeting with graphs without numbers?

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Om said it best in less than 140 characters: “If i had to buy an iPad, I would buy a WiFi one with a Sprint MiFi. Who needs to blow money on a crappy AT&T 3G connection.”

His late Wednesday tweet summed up perfectly my reaction to the Apple iPad’s pricing for a model with connectivity to AT&T’s 3G cellular service: Why would you pay an extra $130 “3G tax” for the privilege of connecting one device to a network whose underpinnings are still suspect? Especially when you can get a mobile Wi-Fi router, either in the slim 3G-only version or in the beefier, brawnier hybrid 3G/4G configuration — and have better connectivity for your iPad and four other devices?

From AT&T’s standpoint, the pricing structure makes sense — by making it a high leap over the base iPad price, you can guess many folks will opt not to spring for a 3G version, especially since (unlike an iPhone) this device is primarily designed for content consumption or creation, and not necessarily for communications. (Though we fully expect Andy A to be the first to use it in an airborne Wi-Fi/VoIP configuration)

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