Sidecut Reports

Is networking hardware giant Cisco ready to throw its hat a bit deeper into the U.S. WiMax market ring? Looks that way from the press conference invite that just landed in our in-box, inviting us to a webcast on Monday, June 9, that will discuss “a new initiative by industry leaders in mobility to stimulate more innovation and new entrants into the WiMAX ecosystem.” The roster of attendees includes Cisco, Clearwire, Alcatel-Lucent, Intel, Samsung and Sprint.

While Cisco and Alcatel-Lucent already have existing WiMax businesses — Cisco bought gear supplier startup Navini last fall, and AlcaLu is behind some smaller operations in the U.S. — both were significantly absent from any previous association with the old Clearwire, the old Sprint Xohm plan, or the new Clearwire WiMax announcements. Cisco CEO John Chambers has previously said that Navini was purchased with overseas customers in mind, but that may be changing due to the new ambitious plans of the new Clearwire and its deep-pocket investors Google and Comcast. Intel and Samsung are already neck-deep in Clearwire partnering, with Intel supplying $1.62 billion in investment cash and Samsung building network infrastructure along the East Coast.

Our best guess is that this new group is forming to do some sort of clearinghouse or testing/certification for Mobile WiMax back-end gear and devices, the kind of activity that is necessary to “stimulate innovation and new entrants” by making it easier to assure customers that it will all work together. More as we learn more!

With all the headline basics of the New Clearwire Deal fully digested, I took the time Thursday night to listen to the entire conference call from Wednesday morning, and came up with a bunch of interesting tidbits. A big one was CEO Ben Wolff’s declaration that the new Clearwire will not just go after consumers (which was both the Xohm and old Clearwire plan) but will also pursue SOHO, SMB and enterprise customers for its 4G wireless broadband service, using Sprint’s existing enterprise sales force to go after Fortune 1000 accounts.

This is either good or bad news for pure business-access WiMax player Towerstream, which now becomes a potential partner, competitor, or acquisition target. Since Towerstream CEO Jeff Thompson had hinted at the former during his interview for our recent WiMax report, that’s where I will guess first.

Other nuances buried in the call include:

– Most of the investors will actually contribute through some kind of LLC process whereby they can earn tax credits for the new Clearwire’s expected losses; only Google invested directly, which (and this is a guess) is what you can do when your stock is north of $500 per share. Guessing we will hear more about this when SEC document hounds get their teeth into the meat.

– Sprint will lease cell-tower space to the new Clearwire at a discounted rate “that is still above our cost,” according to Sprint CEO Dan Hesse. Since Sprint is a majority owner of the new Clearwire, isn’t that kind of like selling stuff to yourself? Talk about bottom-line gymnastics!

– Sprint’s Hesse said it that by the end of 2008, the company would have WiMax networks up that could reach 15 million potential customers; since the soft-launch markets of Chicago, Baltimore and Washington D.C. have a combined population of about 4 million, that means there’s work being done somewhere else (New York, Boston?) as well. Remember the old Clearwire had already planned 2008 launches in Portland, Ore., Las Vegas and Atlanta, so add those into the mix.

Clear(wire)ly, there’s a lot still to digest and we of course plan to incorporate all the details, as well as more analysis of winners, losers and opportunities in our ongoing coverage of the wireless broadband arena. If you are behind the knowledge-curve and want to get a jump-start on all things WiMax, just order our recent WiMax report, which covers everything leading up to Wednesday’s announcement, including a WiMax technology and history backgrounder, as well as deep-dive details on the economic advantages of WiMax and the potential new business opportunities. All past and new subscribers will of course receive any ongoing revised versions of the report, since a purchase at Sidecut isn’t just for one report but for a year of coverage.