Wireless broadband provider Clearwire officially signaled its intent to adopt Long Term Evolution (LTE) technology -- which delivers upwards of 10 times the speed of its existing WiMax network -- but the plan is subject to the cash-strapped company securing additional funding.
Initially Clearwire expects to overlay an LTE network in densely populated, urban areas of its existing WiMax markets where current 4G usage demands are high, the company said.
Clearwire is majority owned by Sprint Nextel, with investments from Comcast, Time Warner Cable, Bright House Networks, Intel, Google and others.
Clearwire said it will not use Sprint's LTE network infrastructure, at least initially.
"LTE will be implemented by overlaying most of our existing 4G network. We will not use Sprint's Network Vision in our existing markets because it is substantially more expensive compared to the cost of overlaying our own network," Clearwire chairman and interim CEO John Stanton said on the company's earnings call Wednesday. "We are in discussions with Sprint about using Vision in new build markets in the future."
As for how the company will fund the LTE buildout, Stanton said the company continues to discuss "an array of strategic alternatives" with outside parties, including strategic equity investments, sale of assets and various forms of debt financing including vendor debt.
Clearwire said that since launching its first 4G market in 2009, video has increased more than tenfold -- now representing the largest component of its overall data traffic. "After spending the last 25 years building coverage networks, I can tell you that in most of the country, coverage is now a commodity," Stanton said. "It is capacity that is king."
At the same time, the company plans to maintain the WiMax network "for a significant period of time to serve our present customers," according to Stanton. Clearwire's existing 4G WiMax network currently covers approximately 132 million people.
Clearwire owns an average of 160 Megahertz of spectrum in the 2.5 Gigahertz band -- more than AT&T and T-Mobile combined, according to Stanton.
The company "is the only carrier with the unencumbered spectrum portfolio required to achieve this level of speed and capacity in the United States," Clearwire chief technology officer John Saw said in a statement.
Clearwire has completed LTE 4G technology trials, initiated a year ago, that achieved download speeds exceeding 120 Mbps. Vendors that participated in the trial included Huawei Technologies and Samsung.
Also Wednesday, Clearwire announced second-quarter results. It had approximately 7.65 million total subscribers, up 365% from 1.64 million subscribers in the year-ago quarter; of the total, 6.36 million were wholesale subscribers through Sprint, Comcast, Time Warner Cable and others. Clearwire expects to end 2011 with approximately 10 million 4G customers.
The company reported revenue of $322.6 million and net loss from continuing operations of $939.8 million for the quarter ended June 30. At the end of the period, Clearwire had $78.8 million in cash and equivalents, compared with $1.23 billion at the end of 2010.
Last week, Sprint announced a 15-year agreement with LightSquared, which is building an integrated 4G LTE wireless broadband and satellite network, for spectrum hosting and network services under which LightSquared will pay Sprint $9 billion and provide $4.5 billion in usage credits over the first 11 years.
On the call with analysts, Stanton said LightSquared "is mired in a contentious dispute" with the FCC, the FAA, the Department of Defense, the Department of Transportation, the NTIA, the GPS industry and others about the potential of interference from the use of its L-Band satellite spectrum for LTE.
According to Clearwire, LightSquared's trial in Las Vegas knocked one of Clearwire's sites out. LightSquared recently submitted a revised plan to the FCC to use a different slice of spectrum. But Stanton claimed that "even this proposal faces strong opposition at the FCC and no one yet knows what, if any, spectrum will be available for use."
Also on the call, Stanton said Clearwire is continuing to search for a CEO. "Our search committee has made good progress and we hope to announce a permanent CEO soon," he said. Clearwire's previous CEO, Bill Morrow, departed the company in March.
