What does Sprint’s new deal with Clearwire mean?
For consumers, it means that superfast LTE service from Clearwire will be available in late 2012 or early 2013, providing extra capacity in metro areas with smartphone data traffic congestion.
Clearwire isn’t trying to blankeet the nation with 4G. It’s going to provide pockets of auxiliary capacity — like extra buses ready to handle crowds leaving a baseball game.
Under the deal announced today, Sprint is prepaying to use that capacity.
The big challenge for wireless companies now isn’t extending coverage as much as providing enough depth to handle data.
“On 4G data, it’s less about coverage, it’s more about being able to use your capacity,” said Clearwire Chief Executive Erik Prusch.
If carriers don’t have that depth, customers see data buffering on their devices, or they’re unable to access websites from a smartphone or tablet because service has throttled down, he explained.
Clearwire’s LTE network will provide “overload solutions” — like a fifth gear — that wireless companies can reach for when they need more capacity.
Even after getting its Overland Park, Kan., sugardaddy to commit up to $1.6 billion, Clearwire’s not in the clear yet.
Still, Sprint is providing enough financial certainty for Cleariwre to proceed. With a huge customer lined up in the form of Sprint, Clearwire is ready to borrow enough to start the $600 million LTE project next year.
“It is really the cornerstone on being able to extend this further,” Prusch said.
Details about the last portion of financing will be provided during its next earnings call, in early February.
So when will wireless customers benefit? Prusch said devices capable of using Clearwire’s LTE technology should appear in late 2012. Perhaps one of them could be the iPhone 5.
Clearwire is using “LTE Advanced” technology that’s capable of peak download speeds of at least 100 megabits per second. That’s about 10 times faster than the download capabilities of most current smartphones.
For consumers who bought Sprint 4G devices that use Clearwire’s WiMax network, such as Evo smartphones, today’s deal brings some relief.
Sprint and Clearwire agreed to extend WiMax service at least through 2015. So those early adopters can keep using their WiMax gear for four more years (assuming the power sockets aren’t worn out by then, from having to constantly recharge their batteries).
The deal should also be a relief for the Puget Sound area. Clearwire is the region’s biggest and best-funded startup. It’s also the last of the area’s homegrown wireless giants to remain independent and headquartered here.
It’s unclear just how much Clearwire’s future was at risk before the Sprint deal, but Clearwire was reportedly on the brink of missing a huge debt payment while they haggled over the deal.
With Clearwire still trying to win back Wall Street’s favor — and raise more money for the LTE project — the company isn’t saying much about job growth. But its $600 million network remodeling job is going to take a lot of people.
“We’re going to be very prudent about the investments that we need to make,” Prusch said, adding that the company already has lots of wireless talent.
“Our guys have built the first 4G network,” he said, “and we’re going to draw upon that expertise to take it even further.”
For the remaining Clearwire employees, the Sprint deal means a far better holiday season than they had in 2010.
Just before Thanksgiving 2010, Clearwire announced huge layoffs and cost-cutting as it struggled to manage its cash. At the time it had 4,200 employees, including around 700 at its headquarters.
At of the end of September, Clearwire employed 1,053 nationally and 393 at its main office in Bellevue.