The Reality of WiMAX
CTIA SPECIAL EDITION - APRIL 2, 2008
Scott Richardson has been on the forefront of
WiMAX technology for years. Now it’s show time.
For the last four years, Scott Richardson has heard every year that “this is the year of WiMAX.” Now he’s ready to think 2008 might just be “that year.
Richardson started out in WiMAX as one of the Intel executives pushing the technology in the early part of the decade, then as head of Intel’s broadband wireless business. He’s among those credited with helping create the IEEE 802.16 standard for WiMAX. For a little more than a year, he has been the chief strategy officer for one of the leading WiMAX carrier advocates, Clearwire.
Richardson laughs now when asked if 2008 is the “year of WiMAX” because he’s heard it so often. But, he says, “I think clearly WiMAX has gone through the hype cycle and now it is a reality.”
Clearwire, founded in 2003 by Craig McCaw, launched its first market, Jacksonville, Fla., in 2004 and now has 50 commercial markets. Four of those are foreign markets, in Europe and Mexico. It has more than 400,000 subscribers, growing subscribers in 2007 at a 91% clip through 14 new market launches and increases in existing markets.
Clearwire has been using pre-WiMAX equipment for its first markets but started trials with mobile WiMAX infrastructure in 2007, including Portland, Ore. It plans to start installing WiMAX equipment in the second half of 2008, although the operator hasn’t detailed how it will do that. Richardson says Clearwire may use dual-mode devices to support both technologies and may overlay WiMAX equipment on its existing markets.
ALTERNATIVE TO DSL
Clearwire’s customers primarily sign up for the service as a fixed wireless alternative for DSL or cable modems. About 60% of Clearwire’s subscribers were won from DSL or cable companies. Richardson says the company is encouraged by what it’s seeing in its established markets, where in some markets one in every five households subscribes.
In its first 25 U.S. markets, which all launched prior to 2006, Clearwire saw 42% net subscriber growth in the fourth quarter, compared to the same period a year earlier. Those markets accounted for 215,000 of its total subscribers, growing 42% year-over-year. They also were profitable as a group, as service revenue climbed 88%.
Customer churn increased slightly in 2007, from 1.9% to 2.1%, while average revenue per user rose 5% to $36.81.
“The growth in our initial markets is encouraging,” Richardson says.
Clearwire has focused on providing coverage in the top 100 markets, with Jacksonville, Fla., and Seattle being the two largest cities it has launched so far. Last year, it acquired all of AT&T’s 2.5 GHz spectrum, which includes coverage in Atlanta, Miami, Orlando, Fla., and New Orleans.
“We’ve concentrated where we think broadband uptake is the highest,” Richardson says.
HOME & AWAY
Using pre-WiMAX equipment, the market focus also was on fixed or portable use, while Richardson says the installation of mobile WiMAX equipment in cities like Atlanta will broaden the potential subscribers.
“We’ll see a good set of subscribers who want broadband on the go, and we’ll continue to have households plus wireless enthusiasts,” he says. “Today the majority of our customers have been household customers with a small but growing number of users taking our PC cards.
“In the future, what we believe will be compelling will be a home-and-away bundle that includes customer premises equipment, residential VoIP as an add-on for a flat fee, and a PC card for mobility.”
Clearwire started offering VoIP in 2007, and about 10% of its subscribers now use the voice service.
One of the questions Richardson gets asked a lot these days is whether or not Clearwire and Sprint Nextel will get back together on a network-sharing deal. Sprint scrapped an earlier deal last November as it reconsidered its WiMAX strategy and the launch of its Xohm network.
Richardson says the two operators continue to talk about different strategies, which could include network sharing, basic interoperability, roaming, or even something like joint billing. “A lot is in their hands,” he says of Sprint.
A deal with Sprint has no impact on Clearwire’s basic strategy, though, he says. The company still plans on offering service in the top 100 markets and that won’t change.
What about Europe? Richardson says Clearwire owns a lot of spectrum that can be used for WiMAX in Europe. It plans to use pre-WiMAX equipment in Europe until it finishes building out the United States. It also is seeking partners, which could include investors.
During the years he has spent as a WiMAX advocate, Richardson says he learned one fundamental fact about any wireless technology – success is not about the technology itself but about the applications and services it provides. He sees that as his mission now, to deliver services and devices using WiMAX but also to drive innovation.
“WiMAX delivers a level of performance that creates a whole new platform for applications,” he says. He cites as an example a demo during Clearwire’s investor day where attendees were driven down a highway in a small van that had a plasma TV mounted in it. They were able to download videos while also watching streaming video.
“Even though the use case is not viable, there is something about sitting in the van and being able to do that as it drives around,” he says. He thinks mobile WiMAX initially will be the mobile Internet, but that it creates an environment for new uses and applications.