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Interview with Clearwire CEO Ben Wolff
Industry update on Clearwire regarding current and future WiMAX deployments and related business developments
Interview: Clearwire CEO Ben Wolff
Even though he's busy managing day-to-day operations
for the "old" Clearwire as he also works on integration issues for the "new"
Clearwire and its planned
nationwide WiMax network, Clearwire CEO Ben Wolff still found time to talk
to Sidecut
Reports for a mid-summer update this week. In this edited transcript of our
phone interview, Wolff talks about what is tops on his priority list, including
Clearwire's coming launch of Mobile WiMax services in Portland, Ore., along with
an ongoing process of educating Wall Street on how and why Clearwire's new
services will be different from traditional cable, broadband or wireless
offerings.
Sidecut Reports: Can you give us an update on where Clearwire
stands right now? Does Clearwire have any access yet to the
new investment capital, and have any integration efforts started with
Sprint?
Clearwire CEO Ben Wolff: We won't get access to the new capital
until the deal closes [expected in Q4 2008]. Until we're through with the FCC
and DOJ processes, we can't coordinate activities. We can do some planning on
what the company will look like after the closing.
Sidecut Reports: Where does that leave Clearwire for the rest
of 2008?
Ben Wolff: We'll continue building out the markets we were
going to build out in 2008 -- Portland, Ore., Atlanta, Las Vegas, and Grand
Rapids, Mich. Sprint continues to do the same thing with the markets they were
targeting [Baltimore, Chicago and Washington, D.C.]. The good thing is, they are
different markets. What has become clear is that we and Sprint are building in a
very similar architecture, in some cases using many of the same [infrastructure]
vendors. So I don't imagine there will be much complexity in integrating [after
the deal closes].
Sidecut Reports: Will your new markets use Mobile WiMax?
Ben Wolff: Yes.
Sidecut Reports: What about your plans to upgrade your existing
networks to Mobile WiMax? Is anything happening there yet?
Ben Wolff: Physically, nothing is happening yet. It's certainly
in the planning stages. Once we consolidate our spectrum with Sprint's, that
will give us enough spectrum depth to do a WiMax overlay [in Clearwire's
existing markets]. So we'll have the ability to share infrastructure and run our
legacy network side by side with a Mobile WiMax network. In Seattle, for
instance, we are currently using all the spectrum currently available to us.
With Sprint's spectrum, it opens up the way for Mobile WiMax.
Sidecut Reports: What are your day to day responsibilities? It
seems like there might be a split between running the "old" Clearwire and
getting ready for the "new" Clearwire.
Ben Wolff: We need to continue to prove out the fact that this
can be a profitable business, and that it can scale out. So I do pay close
attention to operations and profits. I also spend a lot of time on the
integration process -- thinking about what the team will look like when we're
combined, getting all the things in place. We want to move toward Mobile WiMax
and introduce the new Clearwire in one fell swoop.
Sidecut Reports: What about educating Wall Street analysts? How
is that process going?
Ben Wolff: Education is important, especially in this financial
climate. A lot of my job is to help Wall Street understand what is different --
what the services are, what the revenue model is. It doesn't fit into a neat
convention or any one description.
Sidecut Reports: Is that a tough job?
Ben Wolff: Some analysts get it, and others just can't get
their heads around it. Some of the cable industry analysts want to compare it to
residential broadband, to pigeonhole it. I think it's a somewhat jaundiced view
to say that if it doesn't offer video, it's going to be hard-pressed to get high
enough ARPU. Then there are some wireless analysts who want to see only a
national [coverage] footprint, all at once.
It's getting some [analysts] out of their comfort level. For our new network,
the overall cost structure [for infrastructure] is a lot different, and so is
the idea that spectrum is what makes the [WiMax] world go around. That is an
awful lot for people to try to get their arms around.
Sidecut Reports: Does the popularity of the iPhone and its 3G
launch help or hurt your efforts?
Ben Wolff: I think it will help significantly in the long run.
When Steve Jobs got on stage and showed the 3G iPhone
downloading a
National Geographic web page, they made a big deal about how it only took 21
seconds. We went out on our Portland network, using a small-screen device, and
downloaded the same page in four seconds. As great as the iPhone is with its
wonderful user interface and applications, it's still dragged down by the speed
of the network. It's a great precursor, because it's clear that customers want
an Internet experience in their hand. What's next is a network that can really
support it.
Sidecut Reports: What is your take on the growing publicity
around LTE, the 4G choice for AT&T and Verizon?
Ben Wolff: I want to make it clear that Clearwire is not in a
technology holy war. That said, WiMax is here today and it's our choice. But if
you look at it closely, only the uplink [technology] of LTE is different from
WiMax -- 85 percent of the DNA is the same. I think the real [question] is what
spectrum you are going to use to deploy technology. LTE is mainly a
frequency division duplex (FDD) technology, and if you look globally,
there's not much FDD spectrum for use. What's really available is time division
duplex (TDD), which WiMax uses. In most of our U.S. markets we have about 150
MHz of spectrum, versus the 22 MHz of spectrum Verizon got in the 700 MHz
auctions.
So technology is only half the equation. You've got to have a pipe that's big
enough. But really, the consumer doesn't care if it's LTE or WiMax. They just
want a good experience at a good value.
Sidecut Reports: Speaking of value, can you talk at all about
what WiMax pricing might look like?
Ben Wolff: We really can't talk about pricing yet, but I will
say that we will be able to offer a better value than 3G because we can make
bits move at a better cost. What we really want is to give consumers a variety
of different services -- you'll have residential broadband plans at different
speeds and bandwidth, you'll have day passes, and devices with [WiMax] chips
embedded -- so it's hard to talk about what pricing is or will be.
Sidecut Reports: When will Clearwire offer those services?
Ben Wolff: We're going to go with Portland first, and learn
from there. We are looking at a soft launch before the end of the year, say
early fourth quarter. We'll see how that goes and then make a decision from a
"grand opening" perspective and then make decisions about the other markets.
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