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Clearwire Corporation (CLWRD) Message Board

  • mega.hurts mega.hurts Jun 30, 2009 7:08 AM Flag

    Inside The Comcast Deal

    Now that Comcast, the nation's largest cable operator has announced its plans for WiMAX based services its worth examining what the plan really is, and is not.

    What is most obvious is that Comcast does not offer CLWR's "Home" service using CLWR's fixed modem in any configuration. Apparently Comcast doesn't view using fixed WiMAX Internet or CLWR's home VOIP services a good thing. This is a reminder of the ongoing business model conflicts CLWR has among its investors where most have current revenue they want to protect.

    And according to reports the service only supports "laptops" and "no other mobile devices". Its not clear if Comcast precludes netbooks also.

    Of course, there are no WiMAX smartphones and one does not get a commercially supported mobile voice capability.

    What Does the service include?

    For the Portland based WiMAX service Comcast offers a 12Mbps wired home Internet access, a Wi-Fi router along with the WiMAX data service. Presumably the Wi-Fi router attaches to Comcast's wired Internet so the user gets mobility off the Comcast connection - not WiMAX while in the home. The vast majority of broadband customers already have Wi-Fi mobility in their homes so this part of the package piece doesn't give cable customers anything they didn't already have or can't get very cheaply.

    Pricing

    For the Portland based WiMAX service Comcast offers a special "promotional" price of $49.95/mo for one year (regular price $72.95). Usage limits for the Comcast WiMAX service appear not to be specified.

    How does this compare to the respective CLWR mobile-only service and Comcast's fixed service? Comcast shows current regular pricing for its 12Mbps service at $42.95/mo. And CLWR's 2GB Mobile - 2G usage limit - 4Mbps/500Kbps runs $40/mo. Purchased separately these services would cost $82.95/mo.

    This suggests that for the promotional pricing CLWR is receiving a mere $7/mo for a service they normally charge $40.00. That's a whopping 82% cut off CLWR's direct price. The delta could be greater if Comcast's mobile service includes larger usage limits than the one shown above.

    If Comcast can get the "regular" rate of $72.95 that would represent a smaller $10 (%25 discount) from CLWR's own retail price. Not bad for CLWR but CLWR's own retail pricing has already dropped several times and it remains to be seen if Comcast will ever get the "regular" price.

    Expect cannibalization of CLWR's Home services business.

    What becomes very clear is that Comcast may spell the death of CLWR's Home and Home & Anywhere service and its highly promoted VOIP add-on revenue because in the Comcast configuration Comcast controls ALL of the customer's Internet traffic and premium services within the home.

    So on balance Comcast can potentially bring more mobile-only customers at questionable gross margins but for those same cable customers it also kills CLWR's hopes to deliver fixed services and the up-sale service opportunities that go with it.

    You didn't think Comcast would ever allow CLWR to compete with its own wired services did you?

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    • Fundamentally wrong.

    • Ya srsly. They should just give up now and stop deploying.

    • Most every advance in communications technology benefits wired as well as wireless, and since wired/fiber is fundamentally a less noisy medium than RF, wired/fiber will still be proportionally faster than RF 5, 10 or 15 years from now.

      Users will face the same trade-offs as they have today. When they need the greatest speed they'll use wired/fiber and when they need to be untethered they'll use RF although with less performance.

      But for here and now, CLWR is fighting for survival in a 5Mbps world and will be for years to come.

    • The target will evole over the next several years:

      The recent consumer studies such as PEW, show that WBB (not broken down) gained share while DSL lost. Cable showed modest growth. What might be a bit of a surprise is that despite declines in the economy the ARPU, average revenue per user, grew by about 10% over last year and remains on the long term trend line. That is significant because it is part of the basis for the move to 4G-ICT. What is expected is that ARPUs will grow because of increased applications and content, and utility/efficiency. Basically, people and organizations will be willing to pay more because they can do more and generate cost savings or generate new revenues.

      While PEW study is limited to the U.S., studies in Europe and interviews with operators show similar trends.

      WiMAX and LTE, i.e. the new 'framework of technologies' for 4G are both pursuing IMT-Advanced which calls for 1 Gb/s fixed-nomadic and 300Mb/s fully mobile operation. Those may appear to be lofty goals but researchers are already saying that they can be exceeded. The combination of MIMO-AAS (multiple-input, multiple-output and Adaptive Antenna System (beam forming)) with OFDMA and other technologies and distributed microcell architectures
      has shown theoretical gains of 100X or more in bandwidth. While theory can sometimes take decades, if ever, to be used, current networks are now starting to take significant advantage of these technologies to magnify the bandwidth, increase range, increase number of users and increase quality.

      In five years 4G bandwidth plans should be 2X-5X the bandwidth now offered. In another 5 years the bandwidth is likely to soar far higher to 100Mb/s or higher within the cloud and 1Gb/s in local environments and for enterprise and government networks. This can only be done in hybrid fiber-WBA networks. Obviously this will take massive growth of the inter-cell and back haul grid networks. And it may take 15 years instead of 10. But make no mistake, the trends in technology and market demand are solidly headed in this direction.

    • Up until Comcast made its announcement CLWR had an open playing field to acquire fixed access customers anywhere. Now after the Comcast announcement, and assuming Time Warner/Brighthouse follows, CLWR is now constrained in practice to 33% of the fixed access market. And DSL is a rapidly shrinking segment.

      One can spin this however they like but in real terms CLWR's fixed access market opportunity just got cut by 66%.

    • Cable BB or FIOS (>12 Mbs) are not the targets of CLWR. For the fixed BB segment, DSL is the prey. DSL has 33% of BB market share. It is substantial for CLWR to be prospered in fixed Home segment.

      It is waste time to spin a problem does not even exist.

    • The plan is to roll out basic service and also to innovate with new partnerships and services. This is a hybrid of the open and unpredictable way innovation occurs on PCs & the Internet and traditional mobile services are provided. You can expect to see service formulations get tried, modified, re-packaged, dropped altogether, and the same with and by partners as they develop and compete in the evolving market.

      The fact is that Clearwire is using new technology, undeveloped spectrum real estate and new formulations of partnerships to develop their business. And the fact is that nobody, not Wolff, not Scott, and not the new CEO knows exactly how the details are going to unfold because so much is yet to be developed and put into place and, like the other open creative environments, the mode of operations is organic. At times this will likely look like 'organized madness'.

      One aspect of the business is simply to fill a fat broadband pipe with whatever the market determines out of this cocophony of innovation has value. Investors have to accept that markets and foibles of new deployments of technology will determine outcomes. Investors simply resolve this down to results: subscriber growth, availability of new services and how much that seems to mean to future revenues, new partnerships, new devices, opening of new deployments. Eventually it rests on sales and profit trends.

      Dissecting of how Comcast plays in the market is interesting but only in context to the overall business. You place a high degree of consequence on Comcast's entry and term it negative. I disagree. I see this as adding to development and marketing momentum and taking away little. The new Comcast offering mostly appeals to Comcast customers. But some of these who become familiar with the Clear and Sprint wireless service will be pulled in the other direction.. to drop their cable service.

    • So as soon as CLWR did the merger that included the cable companies CLWR's Wolff should have stopped promoting the Home & Anywhere strategy as the basis of their value proposition - because clearly that was one supreme idiot that knew what Comcast had planned and should not have continued to promote Home & Anywhere along with the rosy growth forecast of home VOIP services they delivered in earnings reports.

      And coincidentally I never saw your caution to investors that Comcast would eliminate half of CLWR's go-to-market plan.

    • I am saying that you are either stupid or obnoxious. If you are knowledgeable then you are purposely distorting the facts.

      Only a supreme idiot would have thought that cablecos would be supplying their customers with WiMAX modems for home use. Their agenda is to push the other way: from their network into wireless in the home.

      If you were to take the time to read what Comcast is offering rather than blab nonsense, you would find that they only will offer Clear and Sprint service as part of packages: with cable access, VoIP phone, cable TV, business access packages.

      Why would anyone think that cablecos would offer WBA into homes when that competes with their core service?

      Cablecos face the situation of increased competition from packages offered by mobile providers, fiber optic (more hype than market share), and wireless broadband. Wireless BB has developed to the point that it will soon be able to compete for digital multi-cast/unicast IPTV-HD service to become a more substantial threat to their core business.

      Cablecos are somewhat of reluctant partners.. yielding to the looming competition but never becoming major wireless operators. They have in the past formed consortia and individually participated in spectrum auctions but then have not built that out into wireless broadband networks. But that actually makes sense because prior generations of technology were not up to the task and the market had not sufficiently evolved.

      While Comcast will develop fixed-wireless packages, this is not an easy marriage nor could it be: cablecos have to either take a more active role in wireless of see their business erode as bandwidth increases and back-haul infrastructure goes in with or without their participation to build out ever richer national footprints.

      For now, there is no logical reason for cablecos to detach from their cable and fiber network roots. That is lunacy. That and media content and services is what they build upon - they do not cut off their arms at a time when they need to build an evolving business model.

    • Are you saying CLWR's Home & Anywhere strategy was not the core of its go-to-market plan?

      What are the chances the the rest of CLWR's cable investors will follow Comcast's lead and kick CLWR's fixed access modem out the door?

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