As we rework our recent WiMax report to include the details of last week’s game-changing announcement, it’s a good time to ask what comes next for the new Clearwire and its bigger, grander plans. After comparing the news to the research we did for our initial report, two changes stand out: First, the new Clearwire will get a bit more time to launch, given the complexities of the funding and the technical aspects of the new joint venture. But second, the company will have to meet more ambitious goals of nationwide coverage and roaming, features neither Sprint nor Clearwire had planned to offer in their early 4G WiMax iterations.
More after the jump, including some housekeeping details on when our revised WiMax report will be ready. (Hint: you can order the old one today, and get a new one free when it’s fully edited)
Assuming that its participants decide to actually start spending the money they have pledged toward the new Clearwire, and not listen to those would declare their deal already dead in the water, here is a quick primer on what the $3.2 billion cash infusion has done to the WiMax scene in the U.S., circa mid-2008:
THE BIG CHANGES
1) The money buys WiMax more time, but not a lot more time.
Sprint was starting to get dogged for missing its already delayed April “soft launch,” and lame excuses like not figuring out how to get enough microwave engineers or backhaul into towers weren’t cutting it. Now there are some valid excuses for pushing soft launches back a few months and the big launch until (we are guessing here) CES 2009 — you have device-to-network integration issues, new branding issues, who’s running billing issues, whose budget is paying for rooms at NXTcomm, who’s going to take all those XOHM shirts to Goodwill, etc., etc.
In my professional circle this is known as a “hall pass” — since everybody in any industry knows all this stuff takes time to happen, nobody is going to beat up the new Clearwire for sliding into summer or fall before bits start flying in the new markets. But the new CLWR can’t let it slip much either, because the LTE hype machinery is already running at full steam. If there is anything the telcos know how to do, it’s compete in marketing, PR and lobbying. Witness AT&T Wireless leader Ralph de la Vega’s “we’ll be at 20 Mbps” proclamation less than a week after the big WiMax announcement. That’s called hitting the ground running. Watch for the “WiMax isn’t ready for 911″ warnings from the telcos and their political pals later this summer, a reprise of the tactic that worked so well against VoIP pioneer Vonage.
Bottom line: The delivery heat is off for now, but Clearwire needs to announce hard deadlines soon and then start meeting them or beating them. With the added time comes added competitive pressure and added attention from the media and financial analyst world at large, many of whom hadn’t heard of WiMax before Google and Comcast decided it was a worthwhile investment. That anonyminity is now gone, and the new Clearwire will have to deal with the AT&T-Verizon marketing machines to boot.
2) The new Clearwire will have a nationwide focus from the get-go, as opposed to the local-first strategy Sprint and Clearwire had both been pushing on their own.
While taking on financing dollars and skin-in-the-game partners was the best move, it will call for a radical shift in how the new Clearwire network will be marketed and sold. As recently as the CTIA show in April, Xohm president (and now new Clearwire president) Barry West was talking about building out neighborhood by neighborhood, kind of like how cable companies go door-to-door as they string their wires down successive blocks of streets. Clearwire, which is only starting to offer PC Card connectivity in some of its scattered markets, never talked about nationwide roaming, even if it were a technical possibility. Clearwire also talked very recently about slowing down proposed expansions due to capital constraints.
Now with Google, Comcast and Time Warner in the mix, nothing short of a nationwide roaming network will do. Nationwide might have always been the master plan between Sprint and Clearwire; even though their original JV had failed, Intel was twisting arms all the while, getting the companies to at least synchronize back-end gear to make roaming possible. But now roaming is imperitive, because a Google doesn’t invest in things that may only be sold in some suburbs of Chicago, Baltimore and D.C.
How will this be rolled out and sold? While Sprint execs may have been previously convinced that national-roaming pro users were a small percentage of their target market, now there will be a priority to get a 3G/WiMax hybrid phone moving toward the retail shelves, if for no other reason than to prove that WiMax roaming can be done. Expect a lot of reminders from the new Clearwire about how long we had mixed analog and digital cell phones during that era’s crossover. Expect nobody to really remember or care, but to criticize Clearwire for launching with a network that delivers spotty service. Which is exactly what everyone did during the analog/digital transition too.
Bottom line: The big money means bigger plans faster, which may be the most significant hurdle for the new Clearwire to clear — or the hardest message to deliver to the media and investors if it struggles in expanding its reach so quickly.
More thoughts on motivations for the new investors, and pros and cons this weekend!
As we restructure our recent WiMax report to include the game-changing details of last week’s announcement (and their repercussions for WiMax in the U.S.), you can still order our original report right now, with the assurance that you will get the new, updated version as soon as it’s edited.