Sidecut Reports

Big-box retailer Best Buy will resell Clearwire’s 4G WiMAX wireless broadband service under its “Best Buy Connect” brand beginning in 2011, the companies announced today. The deal, versions of which have been rumored almost ever since Clearwire put together its partnership financing deal back in 2008, makes Best Buy the first big-name wholesale partner for Clearwire outside of its core investor group of traditional service providers, a list that includes Sprint Nextel, Comcast and Time-Warner Cable, which all currently resell Clearwire services under their own brands.

“It’s always been a part of Clearwire’s plan to add additional wholesale partners,” said Teresa Elder, president for strategic partnerships and wholesale operations at Clearwire. Best Buy, which recently announced the Best Buy Connect program to resell Sprint’s 3G services, is a potential attractive partner for any broadband service provider simply because of the company’s size and its on-the-ground presence for customers who prefer an in-person purchasing experience.

While pricing and availability details won’t be provided until it gets closer to the planned 2011 availability date, the 4G service will likely mirror the current 3G offering from Best Buy, which includes a mix of plans and options including equipment-discounted deals as well as month-to-month contracts with no early termination fees. Earlier this year, Best Buy, Intel and Clearwire teamed up for a series of WiMAX equipment and service promotions, with discounts for WiMAX-equipped netbooks and laptops purchased alongside long-term contracts for Clearwire service.

Best Buy, Elder said, represents “a different kind of partner” than Clearwire’s existing wholesale resellers, who are all traditional service providers. While the jury is still out on whether or not consumers want to purchase service plans directly from a big-box retailer, having Best Buy promoting WiMAX in all its stores is a win for Clearwire, since any new customer, retail or wholesale, is a boost to Clearwire’s bottom line.

In fact, when Clearwire announces its 2010 second-quarter financial results next week, it is likely that new wholesale subscribers will surpass new Clear-branded retail customers for the first time, mainly because of the sellout success of Sprint’s HTC EVO 4G WiMAX smartphone that went on sale in June. Comcast and Time-Warner Cable have also increased their WiMAX reselling efforts of late, and in the first quarter of 2010 the reseller partners together added 111,000 new subscribers to Clearwire’s network, for a total of 157,000 wholesale subscribers overall.

Still in the future for Clearwire’s wholesale efforts would be a deal with an electronics manufacturer, where Clearwire would provide the back-end connectivity for something like the Amazon Kindle e-Reader, whose connectivity costs are bundled into the content purchase price. Elder said Clearwire continues to talk to multiple potential wholesale partners, since its spectrum position and network capacity give Clearwire the capacity to do so.

“There’s room for lots of partners,” Elder said.

Readers of Sidecut Reports heard about it a couple weeks ago, but today the three companies made it official with a press release spelling out the details of the Clearwire/Intel/Best Buy WiMAX promotion. While we’re not sure who’s footing the big part of the bill, for potential customers the deal is basically a $100 discount for a Best Buy-purchased laptop with WiMAX embedded inside, providing you also sign up for a 2-year contract for Clearwire service.

If you’re in the market for a new computer anyway and want to give WiMAX a whirl, it’s a bit of a deal sweetener and the kind of thing that Clearwire had been shying away from during its initial market launches, since it didn’t really have the cash on hand to subsidize the discounts itself. But with more big-city market launches either already in the books or due to go live this year, more businesspeople may be interested in a laptop that can connect to both Wi-Fi and a 4G network like Clearwire’s, at no additional cost. So the timing seems to be right.

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While it got lost in the noise generated by the HTC EVO 4G introduction, way back at CTIA Clearwire CEO Bill Morrow hinted about a forthcoming big promotional deal between nascent national WiMAX provider Clearwire, its big partner Intel, and retailer Best Buy. While details of the promotion haven’t yet been released, the plan is already apparently in motion as witnessed by the appearance of Intel/Clearwire backed promotions for discounted WiMAX-enabled gear for purchase at Best Buy outlets.

(Best Buy ads touting discounted prices for WiMAX-enabled netbooks and laptops)

It looks like the search engine optimization is working — the Best Buy ads in the photo above appear clustered around a story about Sprint’s HTC EVO 4G WiMAX smartphone, which went on sale June 4 and recorded boffo numbers according to numerous accounts. But the discounts tell another tale altogether, one that is finally seeing some subsidization coming to the Clearwire WiMAX marketplace. While Clearwire has already been offering pricing discounts on netbooks through its own retail channels, the Intel/Best Buy collaboration is a bit of a sea change for a company that once prided itself on having a no-discount, no-subsidy approach to devices that would use its network.

(Best Buy ordering page for discounted WiMAX gear)

Of course, the HTC EVO 4G is probably the clubhouse leader in subsidized WiMAX gear, since it apparently has sold strongly in all markets where it was available, even with the specter of Apple’s iPhone 4 looming large with its formal introduction today. While we probably won’t learn the hard numbers on EVO 4G sales until Q2 figures are reported sometime in August, the timing of the big WiMAX promotion and some more recent market launches, like Cleveland, Kansas City and Washington D.C. should go a long way toward helping Clearwire reach its year-end goal of more than 2 million subscribers.

Our thoroughly un-scientific research has showed the WiMAX tax dropping in other retail locations as well — at the Lenovo online store the option to add WiMAX connectivity to your laptop has dropped from a $55 option to a $35 option over the last month. We still think that surcharge is a bit steep, but every decline is another buck closer to winning a potential customer. And with Clearwire aggressively taking on AT&T with a public company statement about unlimited network plans vs. Ma Bell’s new pay-per-bit schemes, it’s obvious that WiMAX backers are pushing a lot of chips toward the center of the table this summer in a bid to get ahead in the 4G race.