NNSquad - Network Neutrality Squad
[ NNSquad ] Re: [Dewayne-Net] Clearwire in deep financial trouble, may not survive
The question we need to ask is what is Clearwire's business model? So I went to the website and it said that I did indeed have coverage. In fact my house is listed as "best" coverage. My neighbors, not so good. In looking at the plans things are not at all clear -- there is a flurry of mix and match combinations of services and capabilities hiding behind marketing terms like 4G and 3G and capped and not capped. It looks as if the offerings are also being repackaged as Comcast's Internet2Go and Sprint offerings which are, in turn, repackaged as Virgin Mobile offerings. I have to choose among a small numbers of devices and services that are based on the limitations of cell phone technologies. It's unclear why Clearwire attracted so much funding in the first place. It looks like the core 4G offering is available only in areas that already offering many options that are more attractive and have far higher performance at similar prices and also offer video content, AKA "cable". HSDPA+ (3G) from others is competitive with the 4G coverage. For 3G others have a wide selection of devices. The question is not why Clearwire is in trouble - the question is why they wouldn't be. Stepping back -- in order to differentiate themselves they slice and dice what is a generic bit transport into packages and offerings coupled with particular hardware needed to connect to their system. Ultimately we reduce all these offering to bit paths and above a threshold we have pure commodity offerings which benefit from economy of scale. Applications that use much of the capacity and need the speed need low cost bits. Applications that need a few bits may be willing to pay more for the bits but don't need to given the capacity. So how do you differentiate yourself other lower prices and more availability (higher expenses)? With Wi-Fi "tethering" (AKA access point capabilities) cellular providers can offer these capabilities as incremental offerings and you don't need a special PC or device. Obviously investors putting in billions see value here that I don't? I mean with billions at stake you'd think ... and after that please tell me their assumptions for other investments in "telecom". -----Original Message----- From: dewayne-net@warpspeed.com [mailto:dewayne-net@warpspeed.com] On Behalf Of Dewayne Hendricks Sent: Friday, November 05, 2010 06:52 To: Multiple recipients of Dewayne-Net Subject: [Dewayne-Net] Clearwire in deep financial trouble, may not survive Clearwire in deep financial trouble, may not survive November 4, 2010 at 11:15 PM by Paul Kapustka <http://www.muniwireless.com/2010/11/04/clearwire-financial-trouble-may-not- survive/> Clearwire announced yesterday that it may run out of money in mid-2011 and may not be able to continue as a "going concern". This is an analysis of Clearwire's challenges as it struggles to survive. It really is the best of times and worst of times for nascent national WiMAX provider Clearwire - even as the company reported record subscriber growth of 1.23 million new adds during the third quarter of 2010, it also reported 15 percent staff layoffs, market delays and other cost-saving measures to offset the company's inability to secure new, necessary funding for its ongoing operations. While the demand for the company's 4G broadband services seems to be expanding - Clearwire now expects to finish the year with more than 4 million total subscribers, double the number the company projected at the start of 2010 - Clearwire's complex ownership structure and bootstrapped funding model have led to a poker-game type battle over how and from where the company might secure additional funding. Even though Clearwire has attracted billions in funding, from its inception in 2008 to some additional billions last year, its costly, rapid buildout of more than 60 WiMAX markets along with revenues just starting to materialize has left the company staring at a funding tank approaching the "E" mark, with no friendly filling station in sight. Unlike last year, when majority owner Sprint stepped up to finance Clearwire, 2010 saw some public disagreements between Sprint and Clearwire execs over Clearwire's operations. Though never confirmed, the difference in strategic opinions may have been partly behind the resignation of Sprint CEO Dan Hesse from Clearwire's board earlier this fall, and not a small part of Sprint's reluctance to commit additional capital to the Clearwire cause. According to CEO Bill Morrow, the company is still considering all options for new funding, including selling Clearwire stock, adding more debt, or selling or renting some of the company's wireless spectrum holdings. [snip] Dewayne-Net RSS Feed: <http://www.warpspeed.com/wordpress>