CTIA Updates: The Clearwire Witness Protection Program… to Profitability?

March 31, 2011

If part of Clearwire’s new mantra is a low-profile, cost-savings marketing plan, its presence at CTIA couldn’t have been done better. Instead of a show-floor booth, the nascent national provider of WiMAX services took meetings in a simple gray cubicle at the very back of the meeting-room layout, with a simple block-lettered sign saying “Clearwire” to let you know you were at the right place. Inside, newly minted Chief Financial Officer Hope Cochran spent the week trying to convince anyone who would listen that the company was in pretty good shape, with a confident plan aimed at reaching profitability within a year or so. The question is, are there any believers?

Though the company might be forgiven if its ego is battered from recent events which include the departure of CEO Bill Morrow, chief commercial officer Mike Seivert and a fairly public slapdown of its retail operations from majority shareholder Sprint, longtime Clearwire veteran Cochran said that instant change has been a hallmark of the company since its early days, and even claimed that the current state of affairs has given Clearwire something new, in a well-defined go-to-market plan.

“Ironically there is more clarity now then there ever has been,” said Cochran, speaking about the company’s new plan to concentrate fully on its wholesale operations, the main part of which is providing 4G WiMAX access for partner Sprint’s smartphone lineup. While Clearwire isn’t going to completely give up on its retail Clear brand and service, it’s obvious that moving forward Clearwire’s energy and strategic thinking is going to be centered around continuing to beef up its already-established network markets and support its wholesale partners, which now include retailer Best Buy who is finally reselling Clearwire’s services as previously announced.

While Cochran is as knowledgeable about Clearwire as any executive still employed there — her financial fingerprints have been all over the company’s sometimes complex debt-raising and other funding activities — the fact that a brand-new CFO was doing press interviews at CTIA (and not necessarily about financial matters) means there is an obvious leadership gap at Clearwire, one that needs to be filled soon if the company wants to seriously stay independent. As Clearwire looks for new leadership, however, Cochran said that having board member and industry veteran John Stanton wandering the hallways doesn’t hurt.

“It’s wonderful having John in [as interim CEO] because he’s a natural for the role,” said Cochran, alluding to Stanton’s resume (he was the founder of VoiceStream wireless and then later chairman of T-Mobile). “The mood is actually pretty energetic right now, and John has put a lot of focus on execution.”

The next priority for Clearwire is a positive resolution in the puzzling dispute it has had with Sprint, revolving around the amount of money Sprint pays Clearwire for each 4G smartphone subscription. With 1.42 million wholesale customers added during the fourth quarter of 2010 — Clearwire doesn’t break out its wholesale numbers by partner but you can assume that almost all of those are Sprint smartphone customers — it seems like the relationship is going well for both sides, so the more days that go by without an agreement just adds to the public confusion over the subject. And until an agreement over this issue can be put into place, Clearwire is obviously hindered from completing any other kind of network-based transaction that might help improve its finances, such as the sale or lease of some of its spectrum hoard. Farther off in the future is the possibility of Clearwire using its own spectrum to provide LTE-based services, which could theoretically be much faster than those offered by competitors like Verizon simply due to Clearwire’s abililty to build a bigger pipe thanks to its spectrum holdings.

In the meantime, however, there is a real business at Clearwire, in providing services for the 4.4 million customers already on its network in one fashion or another, a number the company expects to double by the end of 2011. Contrast this to recent media darling LightSquared, which seems to attract nothing but favorable publicity for its still-unexplained plan to offer wholesale LTE services, sometime in the future, on a network yet to be built. With $1.7 billion in its coffers at the end of 2010 and another $1.4 billion raised in debt, Cochran said Clearwire should be able to make its cash stretch to the point where the company is making enough money on its operations to fund itself, perhaps as soon as 2012.

“All I know is that we have a real network with wholesale partners today,” Cochran said when asked to compare the two companies. “We’ll have growth in 2011, a different kind of growth, but we have already spent the money we needed [to build a network]. Now it’s just heads down and making it work.”

CTIA Updates: Verizon on 4G LTE Cruise Control

March 30, 2011

Verizon Wireless CEO Dan Mead at CTIA keynote panel. Credit: Sidecut Reports.

Whether by luck or by design, the decision by Verizon Wireless to basically do nothing public at last week’s CTIA show worked out perfectly, leaving the nation’s top wireless carrier (for now) looking unruffled, unworried and pretty much unconcerned about the pending acquistion of T-Mobile by Verizon’s biggest competitor, AT&T.

It is somewhat understandable that Verizon took a break at CTIA — after all it’s had a pretty busy news schedule for the start of 2011, what with its over-the-top LTE device announcement at CES in January followed by the “We’ve got the iPhone” gymnastics in early February. Still, by not having any public event at CTIA Verizon didn’t have to spend time on its own stage answering questions about AT&T or T-Mobile. Instead, Verizon execs like wireless CEO Dan Mead got to play it cool whenever they were asked about the pending deal, as if there were a corporate edict to simply shrug and look unconcerned whenever the topic came up.

Mead’s reluctance to say anything at all about the AT&T deal, much less denigrate it in any fashion, is perhaps borne a bit by necessity — should Verizon want or need to do a deal of its own in the future, it doesn’t want any hypocritical comments out there. So for Big Red the big wireless show was all about execution and talking as much as they could about their 4G LTE network, which finally got its first smartphone just before the show opened up. (And that device earned a quick rave review from the notoriously tough Walt Mossberg, more good news for Verizon and HTC.)

For the rest of 2011, it looks like Verizon is in full execution mode as it tries to sell consumers and business users on the merits of its 4G implementation, even though the plans associated with the network only allow “unlimited” use via the phone handsets so far, and not through bandwidth-crunching devices like tablets or USB modems for laptops. The only announcement the company made during CTIA was to more clearly list all the small cities that will get LTE service sometime in 2011, a year during which Verizon should overtake Sprint and Clearwire in the number of markets served by a true 4G service.

That’s a lot of blocking, tackling, and tower-site building, so perhaps Verizon can be excused for being so boring at CTIA. Mead, for one, could only ironically thank motormouth Jim Cramer for being a Verizon customer, and stayed out of any verbal jabbing with his CEO counterparts Dan Hesse of Sprint and Ralph de la Vega of AT&T Mobility during their joint panel session. The most stirring things said by Mead were straight promo stuff, like this line — “This is the most robust network in the world. We’re proud of this LTE network.”

Not the kind of thing to grab a headline, but for Verizon that’s not what CTIA was about. Instead, it’s about building success on top of the 4G network they have already launched, and making it live in more places with more devices. Not a bad kind of boring, from many points of view.

CTIA Updates: Sprint — The Uneasy Leader of 4G?

March 28, 2011

Sprint CEO Dan Hesse at CTIA. Credit: Sidecut Reports

You knew Dan Hesse was taking this chairman of CTIA thing seriously when he showed up in Orlando last week wearing black dress shoes instead of his surfer-casual Vans. But Dan’s plans for another blockbuster CTIA were waylaid by the AT&T-T-Mobile takeover announcement, an industry-shattering news event that put a big stink on Sprint’s plans to show itself as a cellular leader.

Without a doubt, Sprint still had the coolio introduction of the show in the mind-bending HTC EVO 3D phone alongside a true 4G tablet, also from HTC. In its usual cutting-edge hip fashion Sprint paid to slice off a largish amount of the show floor to stage its 3D press event, with a small media stage and a whole bunch of nightclubby couches intermixed with gratutitous food stations and even an open bar serving up martinis just after lunchtime on Tuesday.

But even though media types and regular boothgoers crowded the Sprint stations to get a hands-on demo of the eye-popping 3D phone (you really have to see one to experience the coolness of the device) the whole week felt like AT&T had just set off a big stink-bomb at the Sprint party, because every appearance, every panel session and just about every hallway conversation revolved around the new new question: How the heck will Sprint be able to compete as an incredibly distant No. 3 in the U.S. cellular market?

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