Are some of the largest U.S. wireless operators poised to purchase 4G capacity from Sprint Nextel’s partner Clearwire Corp?
Kirkland, Wash.-based Clearwire is in talks with such carriers as AT&T, MetroPCS Communications and Verizon Wireless to sell capacity on its network, The Wall Street Journal reported.
The conversations “are continuing and getting better," Clearwire CEO Erik Prusch told the Journal. “I’m very optimistic. I wouldn’t be building the network or trying to raise money if I didn’t think customers would be there in the end."
U.S. mobile operators have complained to the Federal Communications Commission about an anticipated shortage of spectrum to meet the rising demand for data services, and wholesale prioviders like Clearwire could help wireless providers acquire capacity without having to rely so heavily on future spectrum auctions held by the government.
"There is not enough spectrum for the next seven years," Prusch told the Journal. Carriers "have a problem and we are the solution."
Clearwire sells wireless services directly and also leases capacity to other carriers, including Sprint, which held a 54 percent non-controlling economic interest in Clearwire at the end of June. During the six-month period ending June 30, wholesale revenues attributable to Sprint comprised 34 percent of Clearwire’s total revenues.
The company has been bleeding heavy losses as it continues to build out infrastructure. During the six months ending June 30, Clearwire incurred $1.73 billion in losses from continuing operations.
Clearwire operates fourth-generation mobile broadband networks based on WiMAX technology, but the company has said it must deploy Long Term Evolution (LTE) technology to remain competitive over the long term. That's the same 4G technology AT&T, Verizon Wireless and many mobile operators around the world are implementing.
“Under our current plans, initial LTE deployment would cover those areas of our existing markets where we and other carriers have historically experienced the highest concentration of usage," the company said in a filing with the Securities and Exchange Commission. “We believe that this scope of LTE deployment will provide us with the best opportunity to receive significant wholesale revenue from current and future wholesale customers over the long term, while not substantially impairing our retail business."
Clearwire ended the second quarter with roughly 1.3 million retail and 6.4 million wholesale subscribers.