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[ NNSquad ] Re: [Dewayne-Net] Clearwire in deep financial trouble, may not survive

The question we need to ask is what is Clearwire's business model?

So I went to the website and it said that I did indeed have coverage. In
fact my house is listed as "best" coverage. My neighbors, not so good.

In looking at the plans things are not at all clear -- there is a flurry of
mix and match combinations of services and capabilities hiding behind
marketing terms like 4G and 3G and capped and not capped. It looks as if the
offerings are also being repackaged as Comcast's Internet2Go and Sprint
offerings which are, in turn, repackaged as Virgin Mobile offerings. I have
to choose among a small numbers of devices and services that are based on
the limitations of cell phone technologies.

It's unclear why Clearwire attracted so much funding in the first place. It
looks like the core 4G offering is available only in areas that already
offering many options that are more attractive and have far higher
performance at similar prices and also offer video content, AKA "cable".
HSDPA+ (3G) from others is competitive with the 4G coverage. For 3G others
have a wide selection of devices.

The question is not why Clearwire is in trouble - the question is why they
wouldn't be.

Stepping back -- in order to differentiate themselves they slice and dice
what is a generic bit transport into packages and offerings coupled with
particular hardware needed to connect to their system.

Ultimately we reduce all these offering to bit paths and above a threshold
we have pure commodity offerings which benefit from economy of scale.
Applications that use much of the capacity and need the speed need low cost
bits. Applications that need a few bits may be willing to pay more for the
bits but don't need to given the capacity. So how do you differentiate
yourself other lower prices and more availability (higher expenses)?

With Wi-Fi "tethering" (AKA access point capabilities) cellular providers
can offer these capabilities as incremental offerings and you don't need a
special PC or device.

Obviously investors putting in billions see value here that I don't? I mean
with billions at stake you'd think ... and after that please tell me their
assumptions for other investments in "telecom".

-----Original Message-----
From: dewayne-net@warpspeed.com [mailto:dewayne-net@warpspeed.com] On Behalf
Of Dewayne Hendricks
Sent: Friday, November 05, 2010 06:52
To: Multiple recipients of Dewayne-Net
Subject: [Dewayne-Net] Clearwire in deep financial trouble, may not survive

Clearwire in deep financial trouble, may not survive November 4, 2010 at
11:15 PM by Paul Kapustka

Clearwire announced yesterday that it may run out of money in mid-2011 and
may not be able to continue as a "going concern". This is an analysis of
Clearwire's challenges as it struggles to survive.

It really is the best of times and worst of times for nascent national WiMAX
provider Clearwire - even as the company reported record subscriber growth
of 1.23 million new adds during the third quarter of 2010, it also reported
15 percent staff layoffs, market delays and other cost-saving measures to
offset the company's inability to secure new, necessary funding for its
ongoing operations.

While the demand for the company's 4G broadband services seems to be
expanding - Clearwire now expects to finish the year with more than 4
million total subscribers, double the number the company projected at the
start of 2010 - Clearwire's complex ownership structure and bootstrapped
funding model have led to a poker-game type battle over how and from where
the company might secure additional funding. Even though Clearwire has
attracted billions in funding, from its inception in 2008 to some additional
billions last year, its costly, rapid buildout of more than 60 WiMAX markets
along with revenues just starting to materialize has left the company
staring at a funding tank approaching the "E" mark, with no friendly filling
station in sight.

Unlike last year, when majority owner Sprint stepped up to finance
Clearwire, 2010 saw some public disagreements between Sprint and Clearwire
execs over Clearwire's operations. Though never confirmed, the difference in
strategic opinions may have been partly behind the resignation of Sprint CEO
Dan Hesse from Clearwire's board earlier this fall, and not a small part of
Sprint's reluctance to commit additional capital to the Clearwire cause.

According to CEO Bill Morrow, the company is still considering all options
for new funding, including selling Clearwire stock, adding more debt, or
selling or renting some of the company's wireless spectrum holdings.


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