Clearwire didn’t always follow the usual
big-cities-first approach when it rolled out its WiMAX network – it launched in
Salem, Ore., before New York and San Francisco – but yesterday it let investors
know it would take a different tact with its TD-LTE deployment.
The operator said that New York City,
San Francisco, Los Angeles, Chicago and Seattle will be among the 31 cities it
plans to light up during the first half of next year.
It did not disclose the other markets
for its initial launch, which will bring 5,000 cell sites on air by the end of
June 2013. In all, Clearwire plans to roll out an additional 3,000 cell sites,
bringing the total number for its TD-LTE network to 8,000.
The change in strategy was not
unexpected. Clearwire has said its TD-LTE network will not have the same
city-wide coverage as its WiMAX network. Instead, it will act more as a hotspot
for offloading traffic in high-demand areas for wholesale customers looking to
add capacity to their own LTE networks.
CEO Erik Prusch said Clearwire planned
to use carrier aggregation technology to bond two 20 MHz channels, a feature of
LTE-Advanced Release 10. Most of the country’s LTE deployments run on 5×5 or
10×10 configurations, giving Clearwire a possible edge over the competition.
“As a result of this
accomplishment, and our ownership and control of large swaths of clear and
contiguous spectrum nationwide today, we believe we will be the first operator
in the U.S. to push the limits of LTE technology, giving us the advantage of
offering the fastest speeds and the highest capacity network in the
nation,” Prusch said during an earnings call immediately after the LTE
announcement.
Those speeds, however, won’t be
available country-wide – they’ll only be available in the “hot zones”
laid out in Clearwire’s roadmap. Sprint and Leap Wireless International were
the first two operators to sign on to Clearwire’s still-unbuilt network to
supplement their LTE service.
Prusch said the TD-LTE rollout remains
on track, with equipment testing and site preparation under way. It has also
made “solid progress” with chip vendors and manufacturers on coming
up with devices for the network. The company has yet to finalize equipment
vendors for the network.
Clearwire is working to broaden its base
of wholesale customers for its WiMAX network. Sprint, its largest customer,
said last year it planned to stop using Clearwire’s WiMAX network in favor of
its own LTE network, though it will eventually incorporate Clearwire’s TD-LTE
service. Sprint will continue to use Clearwire’s WiMAX in a new prepaid service
for its Boost Mobile and Virgin Mobile USA brands.
It appears to be making some progress on
that front: Simplexity and FreedomPop signed up with Clearwire after
LightSquared ran into trouble getting its wholesale LTE service off the ground,
and NetZero launched a WiMAX service running on Clearwire’s network in February.
Prusch said Clearwire saw an uptick in interest
from potential wholesale customers around the end of last year, when
LightSquared’s plans began to run aground, and expects to ink new deals this
year.
“Since the end of 2011, we have
seen increasing interest in partner opportunities,” he said. “We
remain in active discussions with several potential partners and expect to make
significant progress towards signing additional wholesale customers in
2012.”
Clearwire added 49,000 net new retail
customers and 537,000 new wholesale customers, mainly from Sprint, during the
first quarter. Wholesale customer growth slowed, but CFO Hope Cochran dismissed
the metric.
“We believe a more important
metric, which indicates demand for our network, is usage,” she said. Total
traffic on Clearwire’s network grew by 14 percent quarter-over-quarter,
outpacing growth in the number of new customers signing up for service.
The uptick in traffic and wholesale
customers contributed to 36 percent year-over-year increase in sales, which
rose to $323 million. Of that, wholesale revenue accounted for $118 million and
retail and other revenue accounted for $205 million. Cochran said Clearwire had
closed the sale of international assets in Germany and Belgium, but the
financial impact of the transactions was “immaterial” to its results.
It is still working to sell off its business in Spain.
Net loss came in at $182 million, less
than the $227 million it lost last year.
Customer metrics were mixed. Retail ARPU
held fairly steady at $46.83, but wholesale and retail churn both worsened
significantly. Wholesale churn spiked from 1.3 percent last year to 3 percent
this year, and retail churn rose four-tenths of a percent to 3.7 percent.
