PDF version of this report
You must have Adobe Acrobat reader to view, save, or print PDF files. The reader
is available for free
download.
Archived Report:
Company Brief
Clearwire
Copyright 2015, Faulkner Information Services. All Rights Reserved.
Docid: 00021986
Publication Date: 1601
Report Type: VENDOR
Preview
Clearwire was once one of the major players in the US telecom market and
played a significant role in determining the standards for the fourth generation
of wireless telecom services. Although the company has since been acquired by
Sprint, its history and eventual fate can provide insight into the current and
future telecom market in the US and elsewhere.
Report Contents:
Fast Facts
[return to top of this report]
Name: Clearwire
Headquarters
4440 Carillion Point
Kirkland, WA 98033
Phone:(425)
216-7600
Web: http://www.clearwire.com
Type of Vendor: Mobile Wi-Max Carrier
Founded: 1998 (Spun off from Sierra Technologies)
Service Areas: US, Europe
Stock Symbol: CLWR (NASDAQ)
Employees: N/A
| Related Faulkner Reports |
| WiMax Technology Standard |
| Sprint Company Profile |
History
[return to top of this report]
Clearwire was spun off from Sierra Technologies in 1998. The company started
out small, originally providing wireless Internet access to business
customers within 25 miles of the Dallas, TX, and Buffalo, NY, areas. The ISP was
initially operating on the unlicensed 2.4 GHz wireless spectrum, requiring it to
compete for airspace with much larger companies. This changed in 1999 when
Clearwire signed an agreement with the Instructional Television Fixed Service
Spectrum Development Alliance (ITFS) which allowed it to use the 2.5-2.7 Ghz
spectrum in 100 markets across the US.1
Due to several periods of expansion and contraction, the new spectrum access
was not utilized until 2004 when Clearwire Holdings was purchased by cellular
technology pioneer Craig McCaw. McCaw, largely responsible for the creation of
AT&Ts national network, merged Clearwire Holdings with his company Flux
Fixed Wireless. The acquisition also brought about a change in strategy. Rather
than focusing on businesses within small local markets, McCaw planned to offer
residential wireless broadband access to consumers in small and medium sized
cities, such as Jacksonville, FL.1
Under its new leadership, and utilizing its allotted wireless spectrum access,
Clearwire grew into a mobile Internet provider for all sizes of markets. The
company moved on to provide solutions for laptops, and other mobile computing
platforms using its pre-WiMax technology. It was not until a vastly
expanded Clearwire acquired the assets of competitor Xohm in 2008 that it began
rollout of true WiMax access in earnest.2
With its services brand redubbed "Clear," the company
began offering WiMax services at vastly increased speeds, and greater range than its previous offering.
Customers could access the service via USB modem, ExpressCard, and desktop modems, at
home, or on the go.
It was also during 2008 that Clearwire began its stint as the 4G network
operator for US wireless carrier Sprint. Clear fulfilled this role until Sprint
chose to launch its own LTE network instead. The carrier had come to realize
that it needed to adopt LTE as its 4G standard, rather than WiMax, in order to
compete with existing offerings from
Verizon Wireless and AT&T.
In May 2011 Clearwire handed over the day to day operations of its wireless
networks to Sony Ericcson. The company said the seven year managed services
agreement was designed to free up its own resources to focus on "increasing operational efficiencies and reducing operating costs." The
vague reasoning behind the decision was likely hiding a different scenario,
which is that Clearwire wanted to free its resources from the burden of its
WiMax network in order to focus on developing and launching LTE coverage.
Shortly after this agreement, the company did indeed come to the realization
that most of the rest of the industry already had: that the fourth generation of
wireless technology in the US would be LTE, not WiMax. With this in mind
Clearwire began a painful and costly transition toward developing a nationwide
LTE network, a task which it was destined to never complete, largely due to factors which
arose later.
In January 2012, Clearwire signed an agreement with Simplexity MVNO Services,
a Mobile Virtual Network Operator, making Simplexity an authorized reseller of
its 4G mobile broadband service, its official preferred MVNE (Mobile Virtual
Network Enabler), and preferred provider for Third-party Branded Services.
The beginning of Clearwire’s final chapter began that same year, when it
became one of the most talked about companies in the wireless industry, although
likely not for the reasons it would have chosen. In December 2012, Sprint, which owned 51
percent of
Clearwire at the time, announced an offer to buy out the remaining 49 percent of the
company for $2.97 per share, or a total purchase price of $2.2 billion.
Satellite television operator DISH Network then made a competing offer at
$3.30 per share. This kicked off one of the most high-profile bidding wars in
recent telecom history, with Sprint finally winning out with its significantly
inflated final bid of $5 per share. Making matters even more complicated was the
fact that Sprint itself was in the process of being acquired by Japanese Carrier
Softbank at nearly the exact same time.
Figure 1. Clear
Market Holdings Prior to Sprint Acquisition
Source: Clearwire
Although
the change was a gradual one, Clearwire’s independent operations were gradually
and consistently reduced by its new owners. During the summer of 2013, the
company ceased to operate as an independent entity. Its assets, much of its
staff, and the entirety of its IP and patent portfolio now belong to Sprint, and
have been integrated into the carrier’s own network and service offerings. This
includes all LTE networking hardware and holdings installed by the company
before its dissolution, much of which became part of Sprint’s then-expanding LTE network.
Key Executives
[return to top of this report]
Following the company’s acquisition by Sprint, the staff was, for the most
part, absorbed into Sprint, with the remaining personnel having been
terminated. No specific leadership within Sprint was ever devoted to the
assets acquired with Clearwire, as they were broken up and merged
with several divisions of the new owner’s business.
Major Products
[return to top of this report]
Prior to its acquisition by Sprint, Clearwire offered both business and residential customers in the
US access to mobile and fixed broadband services via its Wimax network, its
fledgling LTE network, and
its terrestrial holdings. The company also provided a variety of home-based
wireless modems, as well as USB modems for laptops, and wireless access
points.
Following Sprint’s purchase of the remaining 49 percent of Clearwire, its
services were gradually wound down, and have since been cancelled entirely,
or replaced with comparable offerings from Sprint. At its peak, Clearwire
offered services to customers in 77
coverage zones across the US. These can be seen in the map above.
The aforementioned network holdings, as well as whatever hardware and
assets the company’s LTE network had managed to accrue prior to the
acquisition, have since become part of Sprint’s own products and services.
Clearwire’s former holdings can be found powering many aspects of Sprint’s
business, including its 3G and LTE cellular coverage, and wireless broadband
offerings.
Major Competitors
[return to top of this report]
At the time of its acquisition by Sprint, Clearwire ceased to compete as
an independent entity.
Recent Activity
[return to top of this report]
In December 2010, longtime executive Craig McCaw resigned as chairman of
Clearwire. He was replaced by John W. Stanton
Later, in 2011 CEO Bill Morrow also resigned. Stanton took up this office
as well, becoming the company’s interim CEO, a position which he later
relinquished to the company’s former COO Erik Prusch.
In October 2012, Clearwire’s majority shareholder, US wireless carrier
Sprint, announced an agreement with Japanese carrier Softbank under which
the Asian company would acquire a 70 percent stake in its operations.
In this same month, Sprint announced the purchase of additional shares of
Clearwire, further cementing its position as the company’s majority
shareholder.
In December 2012, Clearwire received an offer of $2.2 billion from US
wireless carrier Sprint to acquire the 49 percent of the company it does not
already own. A competing offer was tendered by DISH Network, but is unlikely
to be legally feasible.
Following a lengthy and highly contested bidding war with DISH Network
and other, less important players, Sprint finally closed its acquisition of
Clearwire in July 2013 with a final purchase price of $5 per share, a
massive premium over its initial $2.97 offer.
Verizon Wireless: http://www.verizonwireless.com/
AT&T Wireless: http://www.att.com/
Cricket: http://www.mycricket.com/
T-Mobile: http://www.t-mobile.com/
Virgin Mobile: http://www.virginmobileusa.com
References
1"Clearwire,
Inc." FundingUniverse. July 2005.
2 "New Clearwire CEO and CFO Face the Challenge
of Executing the First 4G Business Plan." 4GTrends.
March 2009.
About the Author
[return to top of this report]
Michael Gariffo is an editor for Faulkner
Information Services. He tracks and writes about enterprise software
and the IT services sector, as well as telecommunications and data networking.
[return to top of this report]