Clearwire

Posted on May 7, 2008

Is this the news you dial-up folks have been waiting on?

Sprint and Clearwire on Wednesday formally announced that they are forming a new publicly traded company — to be called Clearwire — with the goal of building a WiMax network across the USA.

WiMax is similar to WiFi in that it offers speedy, wireless Web surfing. But where WiFi generally covers a very small area, WiMax can cover areas up to 2 miles.

Is this another pipe dream? Shell of a hope but nothing comes of it?

Well, who knows? But if I had to bet I would say this could be the real thing. Why? Well, as usual, follow the money.

Google is investing $500 million. Intel, $1 billion. Comcast is investing $1.05 billion; Time Warner Cable, $550 million. Bright House Networks and Trilogy Equity Partners, headed by wireless pioneer John Stanton, are contributing $100 million and $10 million, respectively.

Think the big guys know something? May well be.

The deal is expected to close in the fourth quarter, subject to approval by Clearwire shareholders and regulators.

But here’s the kicker. The WiMax network is expected to reach about half the U.S. population by the end of 2010. Now that sounds pretty good. Only 2 1/2 years away. But wait, only half of the population will have it by then. Hmm… just which half will that be? Notice they didn’t say half of all those currently only served by dial-up. They simply said half.

Question: Which half will be easier to serve? The half living in populous areas where it doesn’t require much in deployment costs? or the half in rural areas with low population densities with much higher costs to saturate with a signal?

Answer: Obvious

So while they may well reach their goal of 50% population access to WiMax in 30 months, it will be serving markets already being served by wire. They hope to make inroads in those pre-existing markets and try to take away as much business there, thus building company assets before they move out to the areas where they will meet with no competition, therefore allowing them to take their good time. Monopolies needn’t rush.