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Clearwire is in talks with a number of carriers, including AT&T and Verizon Wireless, about eventually providing wireless capacity with its planned 4G LTE network.
“We’re talking to everybody,” Clearwire Chief Executive Eric Prusch said in an interview with CNET today.
Prusch didn’t specifically name the two, but only said the company was talking to multiple companies when asked about AT&T and Verizon. The company’s decision to move to LTE, a more widely accepted standard of 4G used by other U.S. carriers, has helped spur new discussions.
“The level of conversation is more constructive because they see what’s going on globally,” Prusch said. “We’re more applicable today than we were a year ago.”
Clearwire is shifting into a full wholesale provider of wireless capacity as part of its plan to upgrade its network to LTE, with its financial chief, Hope Cochran, telling a room full of investors yesterday that the company wants to be the “Switzerland of broadband.” But the plans, which depend on a network that would be built out until more than a year from now, has so far been just talk. Major companies such as AT&T and Verizon entertaining the idea of using Clearwire’s network, even if the talks are in their early stages, lends some credibility to the company’s plans.
AT&T and Verizon representatives both declined to comment to CNET.
Clearwire has opted to go to a different flavor of LTE called TDD-LTE, which is incompatible with the networks run by Verizon and AT&T without a dual-band chip. But the technology has been embraced by China Mobile and a number of other major carriers in Japan and India, a large coalition that Prusch said should drive down prices for chips and handsets. He said it wouldn’t cost much for Verizon or AT&T to add a chip to its devices, allowing them to run on Clearwire or their own networks depending on the need and traffic.
Prusch said Clearwire’s tests have shown that two different versions of LTE can co-exist in the same device.
“We believe we’re the answer from a capacity standpoint,” Prusch said.
Clearwire’s move to become a neutral wholesale provider of LTE capacity follows a model embraced by LightSquared, a startup looking to build its own wholesale LTE network. The company is still dealing with concerns that its network interferes with critical GPS equipment, but recently unveiled a new device that would eliminate the problem.
Prusch didn’t mince his words about LightSquared.
“LightSquared doesn’t feel real,” he said. “We’re real. We’re now. And we have a network.”
LightSquared wasn’t immediately available to respond to Prusch’s comments.
Clearwire, however, also doesn’t yet have an LTE network either. The company is in the middle of raising funds–$150 million to $300 million for its network operations, and another $600 million to upgrade the network to LTE. It estimates that the network will take 12 months to build once it obtains financing.
It’s still unclear what route Clearwire will go. The company can seek financing through a stock or debt offering, use its vendors to provide financing, or sell off excess unused spectrum. Prusch declined to comment on which route was more favorable, only saying that the company “was circling the wagons” in coming up with the best option.
Prusch also declined to specify a target for when the financing would come, but acknowledged that the issue has been a lingering concern for the company and its investors.
“The sooner, the better,” he said. “Timing is of the essence.”
The company expects to report earnings before interest, taxes, depreciation, and amortization next year, with free cash flow some time after. Much of that will depend on the strength of partner Sprint’s ability to push its current line of 4G products, which use Clearwire’s WiMax network.
One potential pitfall is Sprint possibly getting the iPhone, which could hinder sales of 4G devices as customer gravitate toward Apple’s 3G-only smartphone. Prusch, however, said he wasn’t worried.
“It won’t do anything to slow demand for 4G,” he said. “I’m confident that’s where the industry is going.”
