Darn! I was hoping this stock would trade down to $5.60 or $5.70 so I could add to my position...
Then, Hesse opens his mouth and spews what we've all come to know as "inevitabilities".
I'm sure this article has already been posted but, since reading between the lines in it is a very "revealing" tone, it's worth reading more than once.
Problem is, I might never get that last traunche of CLWR I've been wanting to get on the cheap.
Well, I guess we'll just have to agree to differ....or at least I am happy that I have a differing opinion! You want to push CLWR into your favorite areas - I believe I have a more open mind and have my own opinions. I think they sell a package that offers a lot to a lot of people, including both fixed and mobile...the Pick 2 ... which is a lot better than many folks have today through DSL.
Do appreciate the polite response - makes a change on this board!
No, what I have said is consumers are most concerned about their user experience. What they are "sold" is different and has to do with the setting consumer expectations.
But you are talking about a service that is being pitched to the public as their only fixed-access Internet connection at home. Except if they read CLWR's AUP they will see numerous restrictions, including;
1. Downloading or uploading of videos
2. More than "occasional" streaming of videos or on-line gaming
3. Web hosting
4. Maintaining an unattended or continuous interrupted connection (This eliminates a number of useful applications for security, remote VoIP clients, and numerous other applications)
And then CLWR includes this magic line;
"You may not use the Service in a manner that impairs the user experience of other users, or that otherwise impairs network performance". This basically allows CLWR to throttle any customer at their discretion.
And while the 7GB monthly usage may sound generous for today's smartphone customer, it is woefully inadequate for a modern fixed-access service. Cable Internet operators routinely allow several hundred Gigabytes of data per month.
But this raises another point about CLWR's bi-furcated business model and that is that they're trying to compete in the fixed-access and nomadic/mobile markets but they're not "go to" solution for either.
Mega...come on. The vast majority of users won't care and won't get near to the throttling. You are the one who always says that the users don't care what they are sold. The average Clear user utilizes over 7Gb per month - WAY more (by factors of 100's of %) than on any other carrier. Those who do get throttled by Clear would be bankrupt if they used other providers with overage charges, or would be throttled to zero. Nobody else comes near the "unlimited" that Clearwire provides and nobody else has the intention to get close because they don't have the spectrum. In fact, if I recall, you argued that clear should tier their service (may be wrong on that one, but I thought you did a while back) or else they would lose out!
Come up with another argument - this one you try to play both ways and looks weak. Same as your hoary old "Intel prohibits them from using LTE". Lets have a new argument for the Christmas season!
There is a lot of evidence that suggests that $9/mo ARPU IS the upper end of CLWR'w wholesale ARPU, yet nothing to refute it.
But you may find comfort in the fact that CLWR delivers "unlimited" service like it delivers "4G" service. Its true only in the minds of marketers but not in reality. Read CLWR's AUP and you will find the terms riddled with usage limitations and restrictions. But the real killer is the broad policy CLWR gives themselves to throttle any user's traffic at their convenience. This outrages users that have posted their frustration on this board and elsewhere.
the same $ spread for wholesale as retail... embodied in their commentary that ACPU for wholesale subs was only overhead absorption.
Also, as you've said, we don't know how wholesale revs are going to pan out pending current dispute(s) but Q4 wholesale ARPU will clearly be impacted by both incremental wholesale sign-ups and the conversion of a ton of out-of-markets to in-markets as these big cities light up in Q4.
I don't think the final, absolute numbers for Q4 have nearly the "going concern" implications as they'll have "momentum" implications, which will play heavily, good or bad, into capitalization negotiations.
You’re right. They did disclose the consolidated ARPU, but the $9 figure you use in your calculation does not represent the upper end of wholesale ARPU. The $9 is what the wholesale ARPU would have been this quarter if the dispute between Clearwire and Sprint would have been settled. Again, this includes both in-market, and out-of-market subscribers which brings down the average. The fact is nobody has visibility yet as to what kind of pricing Clearwire has negotiated with its wholesale partners. Clearwire stated on at least two earnings calls that its wholesale contracts were negotiated so that its wholesale and retail businesses would have similar operating margins. Time will tell, but right now I would be willing to bet Clearwire is not trying to build an “all-you-can-eat” wholesale business on a $9 ARPU.
If you have monitored my posts for two years or more than you have seen me challenge a number of assumptions about CLWR and its business model and those challenges have largely come true. I've tracked CLWR as its shares fell from $34 to $6+, and predictably witnessed the vastly over-hyped WiMAX technology become marginalized by its competitor LTE.
But more on the here and now, CLWR did disclose Consolidated Average ARPU of $21.19, composed of both retail ARPU of $42.74 and wholesale revenue of $4.46. However, retail is being phased out so going forward CLWR has to survive on the ARPU wholesale delivers. The in-network, out-of-network rev-share issues CLWR spoke to are obvious but no game changing. As I said in the previous post, even if one assumes all of CLWR's subs qualify for the higher $9/mo ARPU, the goal of positive EBITDA is still out of reach for CLWR based on their own prediction along with their market penetration and ARPU assumptions. The additional subs in LA, NY and SF are not nearly enough to make up the shortfall, and the networks in those markets also adds additional cost.
If one believes CLWR's prediction of achieving positive EBITDA was accurate under the $40 ARPU assumption they have to show a realistic path for the company to grow from 3-4 million subs to between 25-60 million to satisfy their own prediction using the new wholesale ARPU. It was their prediction, not mine.