Sidecut Reports

Another day, another stupid round of “Maps vs. Apps” commercials between AT&T and Verizon. I admit to liking the first pass, but this is all getting really stupid now, isn’t it? And while it may seem like the two big telcos are only kneecapping each other, in reality this whole back-and-forth is one prolonged insult to the prospective-customer public. We, the customers, are no better informed about real network performance now than before all this started. So what’s the point?

How about this idea: If you, Verizon and AT&T, really want to prove whose network is the best — instead of these dumb commercials, how about plowing all that ad-agency cash into producing live, searchable databases with actual network deployment data — simple stuff, like number of cell towers and channels per zip code — and we’ll take it from there. Trust me, there’s enough smart and interested folks out there who would probably have a searchable Google map with the numbers ready in a day or so. Then we could all really tell, square mile by square mile across the U.S., whether the red network or the blue network was truly the best in the land.

Who knows? Maybe in some places it’s Sprint (yellow?) or T-Mobile’s pink that should take the honors. But we won’t know until one carrier has the guts to step up and stop pushing out crap and instead points at the scoreboard. Any takers?

When we heard Clearwire’s Hope Cochran was a no-show at last week’s Open Mobile Summit due to a last-minute trip to New York, we knew something was up — and since Cochran is Clearwire’s senior VP for finance and treasury, it (apparently) had something to do with money talks, specifically the kind that helps you keep building those costly consumer wireless networks.

On Sunday the Wall Street Journal was reporting that Sprint, Intel, Comcast and others will soon be investing another $1.5 billion in the builder of a nascent national WiMAX wireless network, which recently launched services in Chicago, Dallas and Philadelphia. As Om notes, the cash infusion shouldn’t come as a surprise, especially since Clearwire CEO Bill Morrow has been pretty open about his company’s need for more working capital — and likewise, Sprint CEO Dan Hesse has been open about his company’s willingness to double down on its Clearwire investment.

If and when the deal goes through — remember Clearwire reports third-quarter earnings on Tuesday, so a good time to make such announcements — we’ll no doubt hear more about the state of Clearwire’s overall finances, cash burns, etc. While we think they may have more running room in the race against LTE than others do, from an investor standpoint it still looks from here like Clearwire is a safe venture, especially when looked at through a spectrum and core-network buildout point.

On the spectrum side, Clearwire’s holdings in the 2.5 GHz band currently dwarf the 700 MHz holdings of the big telcos, AT&T and Verizon — by about a factor of four to six times the spectrum depth, on average, in the biggest U.S. markets. While you can debate the merits of 700 MHz vs. 2.5 GHz, from a pure bandwith throughput perspective the Clearwire holdings are a bit of a wireless gold mine, one that may yet pay off handsomely for Craig McCaw and company. Whether Clearwire builds the network out itself and is a success financially — or whether it ends up renting out some spectrum to others, like T-Mobile — like Manhattan real estate, someone is going to pay for the bandwidth under Clearwire’s purview.

And from an acquisition standpoint, buying Clearwire could be an easy congestion-reliever for telcos who may find themselves out of running room in a few years. Even if a buyer wanted to rip and replace Clearwire’s WiMAX network with Long Term Evolution (LTE) technology on the radio end, that buyer would still be likely able to use Clearwire’s IP-based core network and backhaul without too many changes.

So is it bad money after good, or a good time to add to a winning bet? While we have long said that the spectrum makes Clearwire an even money bet, the problems for big telcos caused by the booming demand for mobile broadband seems to make Clearwire worth more, not less, these days.

Way back when — oh say earlier this spring — there was no shortage of folks willing to toll the final bell on Clearwire’s market chances. Most of these predictive ramblings had little to do with actual market launches or marketing of the company’s WiMAX services, but instead focused on the cash Clearwire had on hand at its creation-merger closing — $3.2 billion — and speculated whether that would be enough to get Clearwire across the finish line. Now it seems like Clearwire might have a fairly bankable asset — its spectrum, which it is now rumored to be of great interest to T-Mobile on a rental basis. Such a fee might produce a nice chunk of change that could go a long way toward meeting Clearwire’s own capital needs.

Here at Sidecut Reports we always thought the woe-is-Clearwire views were short-sighted, and thought such opinions ignored the company’s biggest asset, its huge chunk of wireless spectrum in the 2.5 GHz range. This spectrum has an interesting history — some was initially owned by Worldcom, which was then obtained by Nextel and then by Sprint through various mergers and deals — but it is now all under Clearwire’s purview, with total DEPTH of anywhere between 100 MHz and 150 MHz in most major U.S. markets.

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