This ISP brings wireless clarity to mobile Web users. Clearwire provides high-speed Internet access and computer telephony services to more than 10 million subscribers (some 1.5 million retail and about 9 million wholesale) in the US under the CLEAR brand over its 4G wireless broadband network. Its service area covers about 90 markets located mainly along the East and West Coasts, the Midwest, and in Florida, Texas, and the Carolinas. Partner Sprint Nextel accounts for nearly all of Clearwire's wholesale business and about 40% of the company's overall sales; it also has resale agreements with Comcast and Time Warner. Sprint Nextel owns just more than half of Clearwire and is buying the whole company.
Established in 2007, Clearwire combined its network with Sprint's 4G business the following year, giving Sprint a controlling stake in the company. Other investors include Intel, Comcast, FMR, and Time Warner Cable, who collectively control about a quarter of Clearwire, and tap its wireless network through wholesale agreements. (Google sold its stake to Credit Suisse in 2012). In 2011 Sprint Nextel firmed up its wholesale relationship with Clearwire by agreeing to spend as much as $1 billion with the company during 2011 and 2012 to enable 4G wireless data services across more of its service area. In late 2012 Sprint agreed to purchase all of Clearwire (although Dish Network made a higher, unsolicited bid for the company in early 2013).
Clearwire continues to add subscribers, netting more than 6 million in 2011 and about 3.7 million the previous year; most of these were Sprint wholesale customers. To keep up the momentum, the company is adding new wholesale partners including mobile service reseller Simplexity in 2012, NetZero in 2011, and Best Buy and Cbeyond in 2010. The roll out of Clearwire's network in large metro areas, including New York, San Francisco, Boston, and Los Angeles, helped to fuel its expansion in 2010 and 2011.
Rapidly growing Clearwire has never been profitable, and it expects to continue losing money in the immediate future as it builds out its network. Sales more than doubled in 2011 due to strong subscriber growth, while the company's net loss also grew because of higher operating expenses. Clearwire spent about 25% more on goods, services, and network costs in 2011 as it pushed into nearly 20 new metropolitan markets.
While the company is accustomed to seeing its sales, marketing, customer service, and advertising costs rise as wholesale and retail subscriber numbers have grown, it was Clearwire's infrastructure investments in particular that took their toll on the bottom line in 2011. These expenditures included tower costs such as rents, utilities, and backhaul (the transportation of data traffic); network costs consisting of network repair and maintenance; and facilities rental.
In the past, expenses related to Clearwire's swelling employee ranks also contributed to its mounting costs, but not so in 2011. The company's headcount more than doubled in 2009 to well over 3,000, but after a slight increase in 2010, its employee numbers shrank dramatically in 2011 to less than 1,000 following a couple of outsourcing deals. As part of its effort to cut operational costs through increased efficiency, Clearwire handed off the day-to-day management of its network to top tier global wireless equipment and infrastructure services provider Ericsson that year. The agreement was part of a broader deal that led to Ericsson taking over the operation of Sprint Nextel's network. Clearwire also outsourced its day-to-day customer support functions to TeleTech, an operator of call centers and other IT and telecom support services.
Clearwire founder, wireless pioneer Craig McCaw (who ran the one-time leading cellular service McCaw Cellular), resigned as company chairman in 2011 amid the financial woes that led to layoffs, a cut back in the use of contractors, and curtailed marketing and business development activities. McCaw continues to hold about 4% of voting control in the company through Eagle River Holdings. – less
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