Clearwire finance chief Hope Cochran
laid out the company’s trump card at an investor conference yesterday: Operators
need capacity, and Clearwire has it in spades.
“People are looking for that
capacity, and there’s not that many places to go,” Cochran said Thursday
at the Goldman Sachs TMT Leveraged Finance conference in New York City.
Clearwire owns 160 MHz of spectrum in
the country’s top 100 markets, giving it ample headroom for additional data
traffic at a time when other wireless providers are running short on spectrum.
The company plans to build a TD-LTE
network over high-traffic areas of its current WiMAX network and then sell LTE
access on a wholesale basis to spectrum-strapped operators that need to add
capacity to their mobile broadband networks.
Operators’ thirst for spectrum has
repeatedly risen to the surface in recent months after AT&T’s merger with
T-Mobile USA fell apart and Verizon Wireless took a sizeable chunk of AWS
spectrum off the market by agreeing to buy it from four cable operators for
$3.9 billion.
Along with the continued setbacks that
have hammered LightSquared’s wholesale LTE plans – a potential major competitor
for Clearwire – “it’s been good to see the tides turn” in Clearwire’s
favor, Cochran said.
Operators could add capacity through
expensive techniques like cell splitting, but Cochran says it could be cheaper
to just piggyback on Clearwire’s network.
“We try to hit that sweet spot
where it’s less expensive to roam with us” than to build out more
capacity, she said.
Sprint and prepaid provider Cricket
Communications have already signed up for Clearwire’s still-unbuilt TD-LTE
service, which will be used to augment their own LTE services.
Clearwire is trying to land contracts
with other wireless providers beyond the first two it has signed up for its LTE
network.
Looking at forecasts of skyrocketing
data growth, Cochran said: “I only need a small market share for my
economic model to work, and that’s what I’m focused on.”
Clearwire is fresh from a recent funding
round and is on sound financial footing for the time being, but it has
struggled to stay solvent in the past. It has repeatedly had to tap the equity
markets and ask Sprint – its largest shareholder – for funding. Sprint’s most recent cash infusion provided
Clearwire with a total of about $1.6 billion.
Additional agreements could help shore
up Clearwire’s financial footing. It recently landed deals with two former
LightSquared customers, FreedomPop and Simplexity.
Meanwhile, Cleawire is seeing firsthand
the rise in data traffic forecast by industry experts. It reports that traffic
on its WiMAX network grew 705 percent between the fourth quarter of 2010 and
the fourth quarter of 2011.
Some of the increase was attributed to a
rise in Clearwire’s subscriber base, but “a lot of the growth is from the
fact that those subscribers are utilizing more,” Cochran said.
Clearwire plans to have its first 5,000
TD-LTE base stations on line around the middle of next year and expects to
eventually extend the network to a total of 8,000 sites, about half of the
16,000 base stations deployed for its WiMAX service.
Sprint currently uses Clearwire’s WiMAX
network to provide its subscribers with mobile broadband service, but plans to
phase out its WiMAX use in favor of its own LTE service, set to launch in 10
markets before the middle of this year.
