Clearwire’s CEO said the company might look at rolling out LTE in a few years. Does that mean Clearwire is tipping its hand, indicating it might participate in the 700 MHz auction and challenge the incumbents even more?

Seybold

The new Clearwire has emerged. Gone is Sprint Xohm and the new brand name is Clear. Gone, too, apparently, is the fact that Clearwire was born a WiMAX company into which Intel has poured a lot of money. According to the CEO of Clearwire, WiMAX and LTE are pretty close to providing the same capabilities and both share the OFMDA technology, so perhaps it makes sense for Clearwire to roll out LTE in a few years when it becomes available.

This is an interesting twist for Clearwire, as it has contended all along that WiMAX was its play. However, several months ago, some of the executives inside Intel began talking about either combining WiMAX and LTE into a single global standard or perhaps supporting both in its chipsets.

What I see here is a pre-announcement that Clearwire wants to participate in the 700 MHz D Block auction when the FCC puts it back out for bid. This block, you may recall, is next to another 10 MHz of spectrum that is licensed to the first responder community (the PSST). This 10 MHz of spectrum will be combined with the D Block to provide a nationwide or regional system of 20 MHz on which first responders will have priority access. The last time this piece of spectrum went to bid, no one wanted to be saddled with the steep price. Nor was anyone jumping to take on the penalties for not reaching agreement with the first responder community about network construction and maintenance costs.

I believe those who are running Clearwire, and perhaps Google, Intel and a few others, are taking a long hard look at this 20 MHz of 700 MHz spectrum and trying to come up with a way to win it at auction and build out a nationwide network to challenge the incumbents. If they have been listening, they know LTE is the favored technology for this network, even though as of now the FCC wants to hold three auctions, one for 58 regional systems based on WiMAX and another for the same regions based on LTE. The final auction will be for a single, nationwide license where the winning bidder gets to choose the technology.

Rather than fight the battle with the first responders to prove WiMAX would be a good solution for this shared network, I believe Clearwire is sending a signal that if it shows up at the bidders’ table, it would be willing to deploy LTE for this system. And that should send a message to the incumbents that when this spectrum goes back to auction, there will be at least one bidder that wants to win it and go head to head with those that have already chosen LTE as their next-generation play. The two largest of these have stated that 700 MHz is where they will be building out LTE going forward.

If the network ends up being LTE, first-responder devices still will have to be backward compatible to CDMA, GSM and UMTS for voice and to fill in network gaps. Since these multimode devices will be quite common in the United States and perhaps abroad, the price of the devices should be about the same as we pay today. Also, first responders would be able to use both the new network and existing 3G networks.

This is in contrast to a WiMAX/CDMA/GSM/UMTS device that would only be built in limited quantities, putting both first responders and the network operator at a disadvantage for device pricing. To me, Clearwire’s statement that it could deploy both WiMAX and LTE should be a signal that it intends to take part in the 700 MHz auction for the D Block and that if it partners with Google and Intel, it will certainly have the ability to win the auction and build out the network.

The value of this spectrum, in contrast to Clearwire’s 2.5 GHz spectrum, lies in the lower number of cell sites it will take to cover populated portions of the United States. Numbers I have seen indicate that to cover 75% of the U.S. population, it will take 22,000 cell sites on 700 MHz as opposed to 62,000 on 2.5 GHz. This difference might be the key to Clearwire’s new position on WiMAX and LTE.

Seybold heads Andrew Seybold, Inc., which provides consulting, educational and
publishing services. For more information, visit www.andrewseybold.com.