Clearwire issued a “going concern” notice in it latest FCC filing as required by law. The company is drastically cutting back on staff, delaying pending roll outs and shelving its intended 4G handset deploy. It could be grim –
Nov. 5 (Bloomberg) — Clearwire Corp., the company building out a high-speed WiMax wireless network, fell in Nasdaq Stock Market trading after disclosing that it may not have enough funding to keep operating its business.
“Our expected continued losses from operations and the uncertainty about our ability to obtain sufficient additional capital raises substantial doubt about our ability to continue as a going concern,” Clearwire said yesterday in a filing.
Clearwire is cutting 15 percent of its workforce, reducing sales and marketing spending and delaying its Clear-branded smartphone as part of a plan to save between $100 million and $200 million this year. The Kirkland, Washington-based company has 4,200 employees, putting the cuts at about 630 jobs.
Does this mean that Clear is going under? Well no, but it clearly indicates that they are gravely wounded. Companies that issue such notices generally double their chances of going under. What is in Clear’s favor is that they have been in business long enough that their chances are better than 50/50 of making it out of the hole with some good containment strategies.
But lets say that Clear does go under? Well gee they may not be the only one. Sprint who is 50+% owner in Clear might just get tipped over themselves if that occurred. Which indicates to me that Clear will be given the tools to make the transition — its in Sprints interest to not be caught in the wake of such a closure.
But it brings up an even more interesting possibility. What about the network? Does Sprint take it over? Do third parties take it over at pennies to the dollar? Couple of interesting what ifs come to mind in that case.
We’ll keep our eyes on this one.
[disclosure: We were a former Clear provider and still a customer. ]
The US Ag Dept and US Commerce are offering up to $4Bn in combined funds for near term expansion of Broadband. The kicker is the funds have to be in the ground by Sept. 2010. Pretty tall order for the cable mavens in itself. The other is the Net Neutrality rules are very restrictive —
But the program’s strict rules on so-called Net Neutrality principles may keep some of the nation’s largest telecoms from applying for funds and low-interest loans. Companies like AT&T and Verizon warned that such restrictions were unnecessary. They also wanted the government to spend as much on encouraging broadband subscriptions as they are on giving out loans to wireless ISPs that want to expand in areas that the big telecoms deem too much trouble to provide coverage to.
For instance, all applicants have to agree to follow the FCC’s fair internet principles, which require ISPs to let users choose whatever devices and applications they like, without interference from the carrier. The nation’s wireless industry has resisted having those rules apply to them, since it would force them to tear down the walls around their networks. That means letting users bring their own devices to a mobile network, use competing video services on their phones, and use their mobile phones as modems for a laptop without an extra charge.
Since the broadband openness rules will apply in perpetuity to projects, it’s unlikely that any of the nation’s largest mobile carriers will apply for such funds. Projects that use network management techniques to speed up video, for instance, or to slow down file sharing traffic, will have to provide notice to customers about how that works. Networks will also have to interconnect with other networks fairly.
In the main that means the AT&T and Verizons won’t play as they won’t open up their larger network investment to the rules requried to get this smaller pot of gold. A big winner if the govt sticks to their guns? Clearwire. As a WISP they can deploy network nodes much quicker. That and their lower capitalization means they would be willing to open up to get the money.
A whole patch of 2.5Ghz licenses are coming up for bid. This is the WiMax band. Same place that folks like Clearwire are playing in. Looking at a list of the service areas most are the rural or outskirt suburban areas. The juiciest one appears to be the Miami service area. –
So now we roll into the PN for the 2.5 GHz band auction. With Kevin Martin gone, it’s unclear whether anonymous bidding will survive. While some folks in the Wireless Bureau love it and think it is an important rule for making auctions more efficient, I know from experience that other folks in the Wireless Bureau hate it. With the 8th floor operating with only 3 Commissioners, one of whom is waiting to move on, and everyone focused on the upcoming DTV Transition June 12, this item is unlikely to attract a lot of attention. Even if the final decision happens after Genechowski and newly nominated 3rd Democrat Mingon Clyburne come on board, along with whatever Republican they finally settle on, the majority of Commissioners will be coming to a very complex issue cold.
Mr. Feld may have a minor expectation that there might be some changes in the bidding process. It could happen. But like most bureaucracies, change comes slowly especially when there are new entrants in the commissioners chairs. Unless they are given an external shove from Congress I would expect it to go down pretty much like 700mhz auction did.
The one outliers is pricing. With 700mhz still in what looks like deployment limbo for a lot of markets the WiMax WISPs might bid more than expected. I suspect they see an opening with a short window and may be willing to pay a little extra before competition drives down pricing.
Read Mr. Feld’s article here.
Most readers know our position on the DTV delay. Its a fools errand that will garner nothing of use to the end user. But it does possibly garner something for folks on the other side of the equation — the providers. In this particular case Clearwire –
But a longer, more disruptive delay might provide some breathing room for Verizon competitor Clearwire. That company is seeking to build market share for its own WiMAX network, a joint venture with Sprint, before LTE is ready for prime time. Clearwire has boasted that it remains years ahead of the competition, but while WiMAX networks in Portland and Baltimore are already up and running, scheduled expansions to other cities have been delayed until late 2009, even as Verizon has bumped up its own schedule. The company’s stock has now been in free-fall for months, and several major backers recently announced they would take major write-downs on their investments in Clearwire. (The roster of large investors in Clearwire includes Obama-ally Google.) A toxic negative feedback loop in investor confidence could leave it unable to finance its promised buildouts for 2009. With any transition delay certain to push the spectrum handover into the next quarter of the fiscal year, if not further, the attendant uncertainty could also factor into investment decisions as Wall Street–and equipment makers–decide which standard to back.
Enter Gerry Salemme. A telecom industry veteran; former lobbyist; and Clearwire executive vice president for strategy, policy, and external affairs, Salemme has also been a generous Obama supporter. Early in the primary season, Salemme gave the maximum $2,300 to Obama for America, and then in August threw in another $10,000 to the Obama Victory Fund, a joint fundraising committee that accepts large contributions and carves them up between the party and candidate. (An apparent typo in the OVF’s FEC filing credits this donation to “R. Gerard Salemine.” OpenSecrets shows the cash as split into $5,400 for the Democratic National Committee’s Services Corporation and two contributions of $2,300 to Barack Obama, which on face would seem to exceed Salemme’s cap for the primary and general combined.) Once the race to the White House was won, Salemme scrounged another $5,000 for the transition effort.
As of this writing, Salemme is not mentioned anywhere on the Change.gov site–which lists members of the Obama transition’s staff, policy working groups, and agency review teams–nor has there been any public announcement of his involvement with the presidential transition. A spokesman for his company says that Salemme “remains in his position as Executive VP at Clearwire.” But Ars has learned that Salemme has been on leave using accrued vacation and acting as a key advisor to the Obama transition team on DTV issues.
I am not some snot nosed waif who got off the boat yesterday. I know this is the way the game is played in many quarters. The problem is the infighting and jockeying that is generally done in the halls and industry forums has spilled out into the general public. It is not even funny. What all these insiders don’t realize is if they let the dirty linen get exposed in public they could find themselves kneecapped like a borrower from a loan shark. Need I remind them that The O has recommended salary caps for those on the dole at the banks? It would not be a big stretch to do the same with anyone using the public airwaves. Don’t scoff.
DO read the whole thing here.
It should come as no surprise that AT&T is no no hurry to deploy 4G. Much of the 700MHz spectrum acquired by the telcos will lie dormant in the early years after it opens if all goes according to plan for the Death Star. While the duopoly’s Dark Side (AT&T and Verizon) have successfully stalled national WiMax deployment with the help of bumbling Sprint management, they have delayed the need to improve services needed to stay competitive. With only AT&T and Verizon holding national 700MHz licenses, there is not much room for any new entrants to force a change of plan either. They have 10 years under the license agreement to switch on service and the telcos have been very good at pushing back requirements (like 100% fiber to home by the year 2000).
Speaking at the 4G Executive Summit on Tuesday, AT&T’s VP of Architecture Hank Kafka downplayed any perceived urgency on the part of the carrier to push out a 4G network based on LTE, or the so-called Long Term Evolution standard.
He said AT&T’s existing HSPA 3G network already offers a superior mobile broadband experience to that of its primary rival Verizon, whose EV-DO technology sports a limited future. (Apple Insider)
The dominant charateristic of the Third World is corrupt dictatorhsips create a small number of cabals by eliminating competition to retain absolute power. If this sounds familiar to the current direction of US broadband, then it’s time to change course before it’s too late. What our duopoly and goverment fail to understand is that a smaller piece of a larger market is still more than 100% of a smaller market.
With the Sprint / Clearwire WiMax merger still pending approval, Clearwire has announced they have 12 months operating cash on hand. Public companies’ full disclosure requirements gives the anti competitive, predatory telcos a time line to delay approval of the merger and potentially kill Clearwire. Such ambulance chasing gamesmanship is not new for the telcos. They’ve used this tactic to crush competition repeatedly, using the very deep pockets only a monopoly can provide.
Clearwire has already said it will require an additional $2 billion to $2.3 billion to roll out a nationwide mobile WiMax network through 2010 and beyond, although some analysts have questioned that total. (See Can Clearwire Do It? and CLWR: Where It’s at With WiMax.)
Clearwire’s SEC filing notes that it expects “to require substantial additional capital in the long-term to fund our business, including further operating losses, network expansion plans and spectrum acquisitions.”
Of course, there’s the question of how the company will raise that extra money in trying economic times.
“We may not be able to secure adequate additional financing when needed on acceptable terms or at all,” the operator writes. Clearwire is considering the possibility of additional public or private offerings and “will likely seek significant additional debt financing, in the short-term and the long-term.” The company already has $1.25 billion under a senior term loan facility in 2007. (Unstrung)
A national open wireless network will break a big hole in the telcos walled garden. I strongly encourage our readers contact their elected representatives to ask that BellZilla not be allowed to crush a worthy competitor by lawyering regulators.