Clearwire Aims To End Wholesale Price Fight With Sprint, Keep Expanding

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News Posted: Mon, Feb 21 2011 1:24 PM
Clearwire hasn't had an easy go of it. But then again, breaking into the wireless industry never sounded like an easy thing to do, so that's probably no surprise either. The company has been burning through cash at an alarming rate in order to build out their 4G WiMAX network, and that buildout rate has become critically important now that Verizon Wireless has turned on their LTE network. Clearwire had around a year to call the 4G world their own, but now, AT&T has HSPA+ rollouts, T-Mobile USA does as well, and Verizon has LTE. Competition is suddenly upon them, and there have even been questions about Clearwire's future.

For awhile, the company was selling service both internally and via wholesale partners like Sprint. But in recent months, they decided to scale back their retail strategy. For one, it's expensive to run a retail shop, and that money could go to building out a network instead. Secondly, it works against Sprint in a way, as people who may consider them for service could otherwise walk into a Clear store and bypass Sprint altogether. That fact has led to somewhat of a riff between the two companies, who are obviously very reliant on one another. The vast majority of Clear's subscribers are there only because of Sprint, and each of Sprint's 4G phones are only able to transmit data over 4G networks thanks to Clearwire.


There has also been a row between them over the rates Clearwire charges Sprint. Just to be clear, Sprint is Clearwire's largest customer and investor, and it's growing evident that papa is no fan of being charged a boatload to use and sell service. A new Reuters report has stated that Clearwire's top priority in the coming quarter is to end the wholesale price fight, enabling their business to move forward and to boost revenue "substantially," which is needed to keep up with the Jones families around them. Clearwire's currenly seeking new financing from a number of avenues, including a spectrum sale or an equity investment. There's also talk that T-Mobile USA would be interested in buying up that spectrum, but no specifics were given on a recent conference call.

Whatever happens, we definitely hope that Sprint and Clearwire put their differences aside and get on with business. WiMAX has a tough road ahead with both AT&T and Verizon committing to LTE, and while Sprint's consumer base is finally on the rise again, all of that could change in an instant if the 4G buildout hits a standstill.
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There shouldn't be any fighting at all. Sprint owns 51% of Clear, which means they can make them do pretty much anything they want them too. If Sprint decides they don't like the way Clear's BoD is acting, they can just go in and fire them all.

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rapid1 replied on Tue, Feb 22 2011 2:42 PM

Yup 51% means you can pull and AMD on that BOD with a quickness :) Also not only does Sprint own 51%, but the greater part of Clearwire's business (say 60% if not more) has come from Sprint. Basically Clear would not be alive without them, and they own a controlling portion of the company.

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