Clearwire talking wholesale to satellite, telcos

LAS VEGAS (Reuters) - Clearwire Corp is in talks with satellite, telecom and consumer electronics companies about using its WiMax high-speed wireless network, seeking wider adoption of an emerging technology in which it is investing heavily.

Chief Executive Bill Morrow told Reuters on Thursday that the upstart operator founded by wireless pioneer Craig McCaw is keen on selling space on its small but expanding WiMax network wholesale to other network service providers, though he would not say which he was in discussions with.

Companies like Deutsche Telekom’s T-Mobile USA, or other wireless providers such as Leap Wireless and MetroPCS Communications, could make sense as wholesale clients, Morrow said.

“They’re prospects for us that potentially could use our network,” Morrow told Reuters in an interview on Thursday at the Consumer Electronics Show, an annual gadgetfest, in Las Vegas.

WiMax is used by a minority of people for wireless Internet connections to mobile computers or smaller devices dedicated to Web surfing. Morrow said he expects to offer Clearwire’s first smartphones toward the end of this year.

The company wants to blanket entire cities with the technology to eventually provide Web links to many electronic devices, ranging from cameras to music players.

Morrow gave no timeframe for any potential deals. His comments follow speculation last year that T-Mobile USA, the No. 4 U.S. mobile service, was eyeing Clearwire’s wireless airwaves to help it develop its own next-generation offerings.

Clearwire’s owners include Sprint Nextel, which has a roughly 55 percent stake, and some of the biggest U.S. cable operators, Comcast Corp and Time Warner Cable. These companies use Clearwire’s network to offer services.

Clearwire is still in the early stages of building its network. But its large holdings of U.S. wireless airwaves licenses could make it a good choice for any company looking to cut costs by renting network space instead of building it, Morrow said.

“If I go after another telco company, I can say I can do it cheaper for you,” the executive said. “We’re definitely having discussions with cable companies, satellite companies, smaller telco companies and consumer electronics companies.”


One hurdle to wholesale deals could be the fact that many big service providers around the world are basing their next generation service plans on another wireless technology: Long Term Evolution (LTE), a rival standard to WiMax.

But Morrow said Clearwire could easily add LTE technology to its network if the need arises. He said such an upgrade would be cheaper and less complex than building a new network because WiMax and LTE technologies have some similarities.

Another reason for adding LTE to the network could be to support devices that support LTE and not WiMax. But Morrow said it is not certain this will be necessary.

“We will (build LTE) if the LTE ecosystem has bypassed WiMax. I don’t think that will occur before 2012. It’s not a foregone conclusion,” he said.

Clearwire has so far built its WiMax network in markets with a total population of 30 million. Its 2010 expansion plan is to cover markets with 120 million people, including San Francisco, New York and Washington, D.C.

It recently raised $2.8 billion to support its network build-out. Clearwire estimates that each market will break even about 18 months after its launch, meaning that markets entered later this year could break even sometime in 2012.

Morrow said Clearwire will fund the next phase of its network expansion, after this year, with cash from operations, as it has no plans to raise additional funding. However, he said this could change.

The company plans to build a nationwide network over time, but has not yet decided the pace beyond 2010, he said.

Editing by Edwin Chan and Richard Chang