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Clearwire Corporation (CLWRD) Message Board

  • mega.hurts mega.hurts Oct 7, 2010 1:54 PM Flag

    Why The CLWR Alliance Is Unraveling

    When the New CLWR deal was done most praised the combined capital resources of each of the investors and thought CLWR would never want for capital but those with greater insight recognized that having too many strategic partners is a liability because strategic partners invest not just to maximize capital appreciation but to drive a business agenda, and that reality is now becoming obvious.

    Each of CLWR's strategic partner-investors have already shaped CLWR's strategies and not necessarily for CLWR's benefit. Because while strategic partners are driving their own business agenda they also are defending core businesses of their own. Some examples.

    1. Intel benefits from CLWR if CLWR delivers mobile broadband using Intel's WiMAX technology and to leverage getting Intel's mobile processors in the mobile devices. Hence, the Intel lock on CLWR to use WiMAX only.

    2. Sprint benefits from owning part of a company that delivers high-speed data services that compliments its own 3G voice services, but does it really benefit if CLWR were to deliver commercial grade VoIP services? It doesn't make sense to Sprint to loose 100% of the revenue of a direct Sprint customer to CLWR only to get back 54% of the value of that customer via the CLWR relationship. It works best for Sprint if CLWR remains a voiceless service forever dependent on Sprint's voice services.

    3. The cable companies wanted a piece of a mobile wireless play but they don't benefit from CLWR competing for fixed broadband to the homes and businessses that the cable companies already serve. It comes as no surprise that some cable companies refuse to resell the "Home" part of CLWR's "Home & Anywhere" service.

    So with all these "strategic investors" the ground rules for CLWR's future were laid out from the start. CLWR would aim virtually all its energy and capital delivering a data-centric mobile WiMAX service and operate primarily as wholesaler under Sprint's brand. The things CLWR needed to avoid was anything other than WiMAX, fixed wireless, commercial grade mobile voice services and their capital should be spent building network infrastructure not replicating the retail functions partners could do for themselves, and arguably better than CLWR.

    Well that strategy might have worked if CLWR could have generated positive Free Cash Flow much earlier but the investors vastly underestimated the time and cost of building a new nationwide carrier business. Hence CLWR has generated huge losses from the get-go with no end to capital calls in sight while the original investors have lost their appetite for more.

    Now for CLWR to survive it has to find new capital and new market segments. It was no secret that tensions between Sprint and CLWR ratcheted-up when CLWR launched the Rover brand. And there's the talks between CWLR and T-Mobile but it is clear that for CLWR to interest T-Mobile CLWR will have to deploy LTE commercially. It is difficult to imagine Intel having much enthusiasm for CLWR once CLWR commits to doing this. Additionally, one of the differences between LTE and WiMAX is that LTE is oriented to deliver both voice and data. What happens to the Sprint-CLWR stasis if CLWR with a new partner like T-mobile were to be able to cut the dependency on Sprint's 3G voice service? This might sound good for CLWR but CLWR needs Sprint's towers and infrastructure. CLWR may be able to cut a deal with T-Mobile but at what cost to the relationship with Sprint and the rest of the original investors? Which of the original investors will exit?

    The New CLWR alliance was highly unstable from the start. It is a morass of too many managers, too much strategic direction and too many sacred businesses of its partners to protect. Now the very things that CLWR needs to do to survive is likely to unravel it all.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • ... every post is a bash, well articulated, with both true and fabricated arguments.

      s

    • Even with two tries you still have difficulty making a comprehensible post.

    • ... completely missed the point.

      I'm sure that anyone with a "marketing" perspective would have gotten it...

      ... in the end, it's all in the eyes of the beholder that MATTERS... the end-user.

      I virtually posted the same thing TWICE and you STILL didn't get it.

      S

    • This does nothing to address the key question why CLWR does not offer commercial grade mobile voice services on its 4G network, nor why it fails to pursue this obvious source of revenue it desperately needs.

    • The number of devices with higher resolution cameras and brilliant, high resolution screens (the amoled screens are great), has increased demands on service providers recently. Meetings with network architects, spectrum experts and managers from large operators shows that demand has ramped to an extent that was unexpected. That is despite the prior rapid demand trend that had already been experienced and its why we are predicting that the BB demand required spend rate vs. revenue graph that has often been shown in power-point presentations is becoming a major concern that could impact earnings of major operators in the near future.

      From a strategic perspective, Clearwire benefits from rapidly rising bandwidth demands to such an extent that it hurts their competitor's profit model.

      To be balanced, each operator has strengths and weaknesses... Clearwire certainly has their fair share of weaknesses that stem from the need to grow subscriber revenue and build out new capital intensive networks... even if more efficient than prior technologies.

    • One would have thought someone that posts here would know better, but maybe not.

      You know that EVO "WiMAX Smartphone". Well the only part of it that's WiMAX is the Internet access. The actual phone part that the customer pays the monthly voice service for is plain old Sprint 3G.

      Even though CLWR has 3-4 times the spectrum of Sprint's 3G network and tons of the latest digital technology, CLWR does not deliver a fee-based mobile voice service and more importantly it does not capture the revenue that mobile voice provides.

      If CLWR was rolling in profit ignoring such a lucrative revenue stream might be understandable but failing to become a full-service provider of smartphone services
      and capture the resulting voice revenue seems awfully shortsighted for a company having to sell assets to stay alive.

    • Typo:

      CLWR does not offer a fee-based commercial grade mobile VOICE service on its WiMAX network.

    • What works nicely on CLWR's network?

      If you're referring to EVO's fee-based voice service its using Sprint's 3G network, not CLWR's WiMAX network. Hence, Sprint gets the revenue, not CLWR.

      CLWR does not offer a fee-based commercial grade mobile service on its WiMAX network.

    • ... but he's pretty informative.

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