Sidecut Reports

The reviews are in on the latest WiMAX smartphone, the Samsung Epic 4G, and they are resoundingly good — meaning that Sprint and its partner in WiMAX Clearwire should have another winner on their hands when the Epic goes on sale Aug. 31. For industry watchers, that date should set a clock ticking on when we might see the first mass-market Long Term Evolution-based smartphone available in the U.S., from big LTE backer Verizon: Will it be Aug. 31, 2011 before we see a Verizon-branded LTE smartphone? Or later? And what does that year-long lead mean for WiMAX’s shelf life?

Given the design complexities that an LTE smartphone from Verizon will have to overcome — namely, multiple radios for different frequencies for LTE upstream, downstream, and 3G and Wi-Fi connectivity — it’s probably safe to bet that LTE smartphones will arrive later, rather than sooner, than the oblique “mid-2011″ deadline Verizon is now publicly stating. And yes, we know that Samsung is planning to release a “LTE smartphone” for MetroPCS in Las Vegas maybe later this year. But one phone for one market does not a national competitor make. It’s interesting for sure, but in any WiMAX vs. LTE entree-provider comparison the MetroPCS offering is sort of a side dish.

Put aside for the moment the kerfluffle about whether or not Clearwire and Sprint will move to LTE in the future, since it’s not something that will happen anytime soon. Instead, start thinking about what will happen in the next 12 months, when Sprint and Clearwire get to keep selling all the HTC EVO 4G phones and Samsung Epic 4G phones they can get their hands on, while Verizon tries to explain why you need to buy an LTE data card and a Verizon smartphone, with limited-download more-expensive data plans for both.

Almost a year ago, I was of the opinion that WiMAX providers needed a snazzy iPhone-like smartphone, if for no other reason than to get the point across. You can market all you want, but what says faster broadband better than a cool phone that can also act as a Wi-Fi hotspot? As I said then, WiMAX folks needed a cool handset to help them spread the message:

What the WiMax industry really needs? A snazzy WiMax-enabled smartphone that can do the talking for them.

Now, the HTC EVO 4G and the Samsung Epic 4G seem to be doing just that. If this device lead can stretch to next summer, will consumers really want WiMAX to go away?

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Pricing and availability details for the second WiMAX phone under the Sprint 4G banner were announced late Wednesday, when the company said that the previously announced Samsung Epic 4G would be available Aug. 31, for $249 after rebates.

Service pricing plans for the Epic 4G are the same as those for the first WiMAX phone, the HTC EVO 4G, which went on sale in June: Sprint will tack on an extra $10 per month for the 4G WiMAX connectivity whether it’s used or not, and will allow the phone to be used as a Wi-Fi hotspot (for up to five additional devices) for another $29.99 per month, same as for the EVO.

In an interesting retail twist, Sprint is letting potential customers “reserve” the device online on Aug. 13, with the ability to complete the transaction at a nearby store on or after Aug. 31. More details on this plan as we hear ‘em.

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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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There’s no pricing or ship date yet, but the folks at Sprint have officially announced the “second WiMAX phone” for the company’s 4G network. Engadget has a full rundown on all the specs which by now seem to be the opening ante for the advanced-smartphone market: Front-facing extra camera for handheld videoconferencing, big fine-grain viewing screen, etc. And we assume you can hold this one any way you want without downgrading the antenna, if you know what we mean.

Not having seen or held the Samsung WiMAX entry the feature that may appeal more to us is the slide-out QWERTY keyboard, something we here at Sidecut central have become somewhat addicted to on our current phone of choice for faster texting. Like the HTC EVO 4G this phone will also sport a built-in Pocketspot or portable Wi-Fi router capability, though it will only support five additional devices as opposed to the EVO’s eight. We’ll have to try a pocketspot shootout between the devices sometime this fall.

Though there isn’t any mention of it in the press release we are guessing the Epic launch is the stick-a-fork-in-it moment for the late great Samsung Mondi, the original WiMAX mobile Internet device that we rightly wronged for being overpriced and underfeatured. It will be interesting to see whether the new WiMAX phone parade coupled with the additional WiMAX markets being launched by Clearwire and Sprint will result in more business use of WiMAX as 2010 winds into late summer and fall. And though there is no “official” launch date for the Epic, we will hazard a guess that this phone will be available when school starts again… in stores near more of you, if you know what we mean.

They say it, and we believe it: Right now, for the foreseeable future, Clearwire Corp. (Nasdaq: CLWR) is a WiMAX company, selling a WiMAX-based 4G service that by all accounts is doing quite well. But the company’s potential to add Long Term Evolution (LTE) services to its portfolio increased in probability Wednesday, with the revelation of the reversal of a legal deal with Intel that had previously prohibited Clearwire from offering anything except WiMAX until late in 2011.

Since LTE equipment still isn’t even available in commercial volumes, it’s still early days to talk about any Clearwire-to-LTE move. But the noise over such a strategy may raise in volume following Wednesday’s quarterly earnings conference call, when Clearwire CEO Bill Morrow said that the company’s previous deal with major investor Intel — which effectively would have kept Clearwire from launching any services other than WiMAX until about 2012 — had been renegotiated, and has been replaced with a structure that is much more flexible, and will allow Clearwire to move more quickly to LTE should LTE-based services and devices (like say, an LTE iPhone) take off.

While it’s going to ride the WiMAX train as long as it can, Clearwire and its partners aren’t ignoring the obvious market momentum behind the still-developing LTE standard. In fact, Clearwire CEO Bill Morrow has publicly floated the idea of harmonizing the technologies in the future, under a hybrid 4G standard that could provide for economies of scale on all fronts. Given the remote possibility of that happening, the Intel re-negotiation is a sign that Clearwire is also already taking steps to ensure it can move to LTE just as fast as any other provider, maybe even faster than some others.

What makes Clearwire and LTE such an interesting discussion is the probable ease with which the company could add LTE services to its portfolio. (Unlike Stacey H at GigaOM, I don’t think this is necessarily an either-or-game.) Given its huge spectrum position, Clearwire has enough assets to build an LTE network side-by-side with its WiMAX network — unlike AT&T and Verizon, who are already talking about repurposing spectrum from 2G and 3G to make room for 4G.

In terms of network infrastructure, both WiMAX and LTE are IP-based, so it’s a guess that much of Clearwire’s core network equipment could handle both types of traffic. Responding to questions about LTE costs on the call, Clearwire was coy but did note that of a typical site build, the portion associated with radio-specific equipment represents between 10 and 15 percent of costs — so in theory Clearwire could build itself an LTE network for a fraction of the cost of a greenfield provider starting from scratch.

There are of course many details and questions to work through — such as the fact that Clearwire’s spectrum at 2.5 GHz is much different from the 700 MHz spectrum Verizon and AT&T will be using for their planned LTE deployments. But with big LTE backers Samsung, Huawei and Cisco in Clearwire’s corner, it’s safe to assume smart people are already looking into such challenges. Another note from the call today: Clearwire announced “vendor financing deals” with two of its infrastructure partners — perhaps a sweetener now to move to LTE later?