Sidecut Reports

We’ll break down and unpack the news as we get more info during the afternoon, but the big news from Clearwire today is on two fronts: One, a huge surge in new subscriber adds that had the company adding another million projected subscribers to its yearly predictions; and two, announcement of technical trials of Long Term Evolution (LTE) technology, the same technology that big cellular providers like Verizon and AT&T will use for their forthcoming 4G services.

On the new subscriber side of things, as we predicted Clearwire benefited from a huge surge of network adds from its wholesale partners, most likely Sprint Nextel which had sellout success with its HTC EVO 4G WiMAX smartphone launch in June. For the quarter, Clearwire added 722,000 net new subscribers, with 595,000 of those coming via wholesale channels and another 127,000 added via Clearwire’s own retail sales efforts.

Clearwire now claims 1.7 million subscribers on its network, 752,000 of which are wholesale customers — meaning that by the end of the year, the company may have more wholesale customers than retail. The interesting twist to the wholesale number from Q2 is that more than half (52 percent) of the new 4G customers live in markets where Clearwire’s services aren’t even yet available — meaning that people are either buying 4G products like the EVO simply because they like the device, or they are buying hybrid 3G/4G devices and using them for travel to WiMAX markets. Back in February, Clearwire had seemed a bit optimistic when it predicted it would have 2 million subscribers by the end of the year. Wednesday, Clearwire CEO Bill Morrow said the company now expects to have nearly 3 million network subscribers by year end.

On the LTE side, Clearwire’s tiptoe into the LTE waters became a full-scale immersion Wednesday, when the company said it would conduct multiple technology tests with a partner list that includes Huawei, Samsung and chip maker Beceem. While Clearwire CEO Bill Morrow said the company remains “committed to WiMAX” for its current network buildout plan, expect most followers to take Morrow’s claim that Clearwire could conceivably launch LTE services with “real-world download speeds of between 20 Mbps and 70 Mbps” and match that up against the expected 5 Mbps-12 Mbps speeds forthcoming from Verizon’s LTE services later this year.

We will break down each and every facet of all the news today — buried inside the list of announcements was another wholesale contract with small-business service provider Cbeyond, and Morrow’s contention that Clearwire might look into selling some of its licensed spectrum to help fund the company’s ongoing expansion plans.

While we don’t even have time to dig into Clearwire’s financial numbers — our 30,000-foot view says that revenues and ARPU don’t mean so much right now since the company is so early in its deployments and strategic agreements — it seems clear from the rapidly growing subscriber adds that Clearwire is making the kind of hay it needed to, if it wants to have any chance of competing directly with the larger cellular providers when they ramp up their massive marketing and infrastructure spending machinery.

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The question came near the end of AT&T’s second-quarter earnings call today, and apparently was too late for many people to notice — but according to AT&T, it has activated somewhere between 400,000 and 500,000 iPad 3G devices, perhaps disproving its own CEO’s contention that most iPad users would stick to Wi-Fi connections.

According to AT&T senior executive vice president and chief financial officer Rick Lindner, Ma Bell was surprised by the amount of interest shown in the iPad by its business customers, especially since big-company CIOs had been reluctant to approve iPhones for corporate purchases when the phone first arrived. Lindner’s findings echoed those found by Apple itself, which talked about enterprise interest during its earnings call earlier this week.

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If you were looking for rosy numbers on how many iPhones AT&T activated during the second quarter of 2010, the company’s financial conference call Thursday was right up your alley: 3.2 million new iPhones activated, part of another big increase in smartphone users on AT&T’s network.

But if you were looking for some equally hard statistics on how AT&T planned to handle the increase in traffic while also improving its previous poor network performance — you might want to consult a Bible instead. Instead of delivering actual numbers about, say, the number of new backhaul lines installed, new fiber connections or actual numbers of new towers sited, AT&T execs on the call today fell back on the faith-based methods of accounting practiced last week by company CTO John Donovan, who pledged that Ma Bell would “move heaven and earth” to stay in front of user demands.

Unless you live in San Francisco, that is, where moving celestial spaces and large chunks of terra firma will come 90 days after those tasks get completed in New York City, according to AT&T Thursday. So despite claims back in January that the company was doing all it could to improve network conditions, moving heaven and earch apparently isn’t that easy even when your revenues are in the billions of dollars per quarter.

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When observers look at nascent national WiMAX provider Clearwire Corp. (NASDAQ: CLWR) they see a potential competitor to big cellular providers like Verizon and AT&T in the wireless-data marketplace. But then they hear about Clearwire reselling its services through partners like Sprint, Comcast and Time-Warner Cable, and confusion sets in.

You can hear the questions sometimes during conference calls or at trade-show press conferences: Does Clearwire compete with Sprint? How can it hope to sell services against Comcast? To help you gain more understanding, our just-released CLEARWIRE BUSINESS REPORT for July, 2010 explains the details behind Clearwire’s wholesale operations, and why it may not be a bad thing if wholesale subscribers outnumber Clear-branded retail customers for the just-completed second fiscal quarter.

An excerpt from the report (which you can download immediately for just $9.95 USD):

While some observers want to see these multiple brands selling the same service as potential competitors, for Clearwire it doesn’t matter who sells the subscription because every active user on the network means more money for Clearwire’s bottom line. Though Clearwire gains more up-front money by signing up customers to its own-branded service, it must also spend marketing and operational money to get those customers. Wholesale subscriber adds, on the other hand, don’t cost Clearwire anything to obtain, so even at a discounted revenue rate (which has not been reported by Clearwire) Clearwire is still making a good margin because it doesn’t have to pay the hundreds of dollars per new user in traditional customer-acquisition costs.

There’s plenty more simple goodness like that in the approximately 3,000-word report, including details on the latest Clearwire devices (like the new WiMAX smartphones) and some intelligent discussion about the competitive threat from Verizon’s pending LTE launches later this year. Get up to speed on all things Clearwire by ordering your copy today!

The one thing missing from an otherwise excellent breakdown of AT&T’s iPhone woes by Wired today is a detailed explanation of why Ma Bell’s antiquated backhaul infrastructure and lack of available wireless spectrum are the main reasons why AT&T couldn’t cope with the iPhone data demands.

We’ve heard all about how the unprecendented data surge caught AT&T unawares, even though its top executives once claimed that handling the iPhone’s demands wouldn’t be a problem. A couple years later, and the company still hasn’t gotten things right. Don’t shareholders, investors, partners and customers demand a better explanation than a vague promise to move heaven and earth to fix the problems? How long will such data-free answers suffice?

We’ll know more when AT&T holds its quarterly conference call this Thursday — as in, we’ll know if Ma Bell is going to provide real answers, or perform more duck and hide.