The delay in WiMAX funding previously reported for Clearwire Corp. continues to plague the service provider, which needs to close a funding gap of about $2 billion to continue the buildout of its nationwide 4G mobile broadband networks. Clearwire CEO Ben Wolff said this week that the tight credit market and a drying up of new investment is indeed impacting Clearwire’s overall funding plans.
That’s surely disappointing news to investors like Intel Corp. and Google Inc., which along with others like Sprint-Nextel Corp. and some cablecos, have sunk a collective $3.2 billion into an initiative to bring pervasive mobile broadband and a slough of always connected consumer electronics to the nation.
Wolff stopped short of saying the situation will prevent further buildout of the Clear WiMAX network. And Sean Maloney, head of sales at Intel, said on a conference call Wednesday that Clearwire’s capital situation is adequate to keep going “for a while.” But nonetheless Clearwire has clearly been struggling. The goal had been 30 markets by the end of 2008; Clearwire managed to roll out only one, in Portland, Ore. Network partner Sprint meanwhile launched a WiMAX offering in Baltimore, but the two are technically incompatible with each other.
The new goal is to cover 140 million users by 2010, but the lack of funding remains a potential roadblock.
“It’s clear that capital markets are closed for either borrowers or companies that are trying to raise capital, regardless of what kind of company it is,” Wolff said to Bloomberg. “We’ve seen challenges across the board.”
Without a widespread deployment this year, the future of Clearwire’s envisioned success for WiMAX in North America could be in jeopardy. Clearwire had hoped to have at least a two-year time-to-market advantage over providers deploying LTE, which is a rival to 4G mobile broadband technology. LTE fans include AT&T Inc., Verizon Wireless, T-Mobile USA, and all three major Canadian mobile operators. And they’re all targeting late 2009 (Verizon) and 2010 (everone else) for commercial deployment. This has the potential to make the economies of scale look much more attractive for consumer electronics makers to create LTE devices rather than WiMAX devices.
