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Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

August 24, 2009 at 12:00 AM

Q&A with Clearwire CEO Bill Morrow

Here is a fuller version of the edited Q&A with Clearwire CEO Bill Morrow that was the basis for today’s column.

Among other things, he talks about how customers of Clearwire’s current service will be affected by the network upgrade happening in Seattle in December.

Q: A big question is whether Clearwire will have financing to build what you said you’d build.

A: We do — $2.5 billion — which gets us to the 75 million [potential customers] level, but we’re planning for 120 by the end of next year. But as I’ve told many of the analysts, I’m confident we’re going to get the funds. It will be there. It’s more what terms we will have and how that will look, that’s really what were more focused on and looking at right now.

Q: Some analysts are pretty concerned about that.

A: If you consider just for a moment the opportunity to grow in this marketplace, where almost everybody confirms the real growth is going to be in a broader-band wireless mobile play, we’re in the sweet spot. Sprint is relying on us to do that for them, the cable companies don’t have their own access for this and there’s really no other carrier with the spectrum to be able to launch into this area, other than AT&T and Verizon, and this is a brand-new space.

We’re not trying to compete against AT&T on the classic wireless phone system; this is a new game, a new era. Many of the incumbents started with voice and then they added data on top of it. We start from the data and then we add voice.

I’m not naive. I know Verizon and AT&T will eventually want to be in this same space. But the fact of the matter is we’re here now and there’s a big enough market where everybody can play.

Q: What about Verizon moving ahead with its LTE mobile broadband network?

A: It doesn’t bother me because I think it’s an affirmation that the future is in this space and there’s an enormous, pent-up demand among consumers. I like it – it puts more attention on it, it drives the ecosystem, it drives the developers and the application software writers to think ‘great, we’re going to have what we had on the fixed-line, broadband side on the mobile level, so let’s all start to work on that.’ So I like them getting more aggrrssive.

Q: Will you give service to tech companies in the Seattle area to encourage them to develop 4G products, similar to the way you’re providing service to Silicon Valley?

A: As we roll the markets out there will be more and more opportunities. Even though it’s a commercial service, that doesn’t mean we can’t go to some of the high tech firms right in our local area and say, “Let’s work a special arrangement, where you focus on this, we’ll provide the necessary enablement factor,” and I think we can take advantage of some of the high-tech prowess that exists in the Northwest.

Q: So you’ll offer them service on a case by case basis rather than a developer network like the one in Silicon Valley?

A: That’s correct.

Q: I’m waiting for a company like Sony to announce an electronic book, game player or other device that uses 4G broadband, to get ahead of Amazon,cin and its 3G Kindle, and uses your network to differentiate their reader or device.

A: There are several consumer electronic companies that are interested in doing that very thing.

Q: Would you have a relationship with them similar to what Sprint has with the Kindle, where the service cost is included in the initial cost of the device, so there aren’t monthly fees?

A: Pretty much, yes. When I managed Vodafone UK, the European operations, a lot of the European carriers started what’s called a service provider model. What we’re seeing is interest among consumer electronics companies — I think much like what Amazon did with the Kindle — saying I’ve already got a distribution channel set up, I’ve already got a brand name that I want to support, I have products that access the Internet and networked. All I really need is a 4G, high capacity, high speed, high video capability network and I’ll take care of the rest. We’re seeing people interested in this.

Q: Looking a few years out, do you see the majority of your customers using your service through devices like that or direct subscriptions?

A: I think it will be a combination thereof. I would say in the next three years it’s not likely to hit the majority. It will be more direct, either through the Clear brand or through Sprint or Time Warner or Comcast sorts of wholesale channels.

But there will be a complement, a growing complement, that will be this service provider model of consumer electronics. Three years is pretty soon, but not too long thereafter.

Q: How is Google going to leverage its investment in Clearwire – will they offer a mobile YouTube player, a 4G Android Web tablet?

A: Google is who you ought to talk to. I think the best thing we can do for Google is grow the ecosystem. If you consider the money Google makes with advertising revenue and search on the fixed-line broadband side, that’s a pretty big cloud that they’re involved with. And you think about the size of the cloud if real mobile broadband took off — it will outpace the fixed line side. If they can stimulate that – which I think they are doing with things like Google Voice and Android and a lot of other things — that’s just going to fuel that growth that we will prosper from as well.

Q: It seems like you have the challenge of offering initial coverage, and then coming back again and beefing it up — that’s been a challenge with the pre-WiMax service you’re offering now, where you have the footprint but not total coverage.

A: There will always be holes that you want to close over a period of time. We’ve taken the approach of designing the network with all the experience we’ve had now over three decades of wireless, where we know where people are, we know where they use it, we know where it’s important to them and we’re designing that from the beginning.

There’s always a number of sites that take longer, with permitting and when they come on. In Portland we’re still turning up sites, expanding the richness of the coverage within Portland, but we usually start the market within a geographical area with decent coverage.

Q: I’ve heard complaints from customers of your current, pre-WiMax service in Seattle. It seems like you have a challenge to convince those people that your new service will be better.

A: Unfortunaltely we can’t cover everybody and everywhere they go right from the beginning, so the people that are in the covered area are thrilled. It’s the people on the outlying area, that may live partially in or work within the area of coverage but not live within the area of coverage – once you get used to the service it’s kind of addictive, so it’s a frustration when suddenly you don’t have it. T

hat will exist for quite awhile. If you think about it, it still exists on the incumbent carriers today. They’ve been building these networks for quite some time now and invested 10s, 20 and 30 billion in networks and it’s still not full-blown, blanket coverage across the nation.

Q: How will you take care of customers that have your first generation service?

A: We’re finding a much faster convert rate than we thought in the markets we’re starting to convert. For most of them it’s a like-for-like cost but with an added service of better perfomance and it’s a very easy transition.

Q: I’m still getting direct mail at home, asking me to sign up for Clearwire service. Why would I sign up for the 12 month plan when you’re changing the service by the end of the year?

A: We’re trying to be very customer centric about our approach. Let’s say you signed up for a 12-month contract right now, an extension, and you’re paying a $39 a month tariff rate. When we send you the message saying we’re ready to convert you, here’s your new modem and equipment, let’s convert you over to WiMax, we’ll take into account that you made a commitment to us and have a contract that you extended.

So there won’t be any extra cost for you — it will be nominal — in the way all of this works but with far better performance.

Comments | Topics: 4G, bill morrow, broadband


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