Few names garner as much attention in the wireless space as Craig McCaw, who is often regarded as one the savviest investors in the industry. From the original creation of McCaw Cellular Communications Inc., which eventually was sold to AT&T Corp. for more than $11 billion in 1994, to his company-saving investment in Nextel Communications Inc. in the mid-’90s, McCaw has made a fortune from wireless.
McCaw’s more recent ventures have proven less lucrative as his ongoing attempts to launch a wireless network using satellites or at least the spectrum reserved for satellite-based services have failed to materialize.
McCaw’s latest move in the wireless realm, Clearwire Corp., stepped into the wireless data space late last month offering high-speed Internet access to customers in Jacksonville, Fla. The Clearwire service uses Orthogonal Frequency Division Multiplexing technology developed by NextNet Wireless Inc., which McCaw purchased along with spectrum acquired from Clearwire’s namesake, Clearwire Technologies Inc.
The initial launch covers more than 120,000 potential customers in 100 square miles surrounding Jacksonville, including the city’s downtown, Southside, Mandarin and Fleming Island. Clearwire said it expects to expand services to additional portions of the city, including Arlington and Beaches in the fall and Orange Park, the Westside and Northside soon after.
Clearwire said it expects to expand service to St. Cloud, Minn., later this year and have up to 20 markets covered by the end of next year.
As part of the Jacksonville launch, Clearwire is providing free modems that can be checked out at library branches in the city. That, combined with the claimed easy set-up, should help spread the word about the service.
“You can buy the service at select local retailers, take it home, set it up and be online in minutes,” explained Clark Peterson, president of major markets for Clearwire. “It’s plug-and-play as far as installation-no need for a technician to come into your home and no need to load software onto your computer to make it work.”
Pricing for the service varies depending on network speeds, though Clearwire claims it undercuts competing wired broadband services and is available in a number of areas that are not served by wired offerings.
Plans begin at $25 per month for 512 kilobits per second of download speed and 128 kbps of upload throughput as well as five e-mail accounts and 10 megabytes of Web hosting space. In addition, Clearwire offers 768 kbps download and 256 kbps upload speeds with seven e-mail accounts and 15 megabytes of Web hosting for $30 per month; and 1.5 megabits per second of download and 256 kbps upload speeds with eight e-mail accounts and 25 megabytes of Web hosting for $35 per month. All of the plans include promotional savings of $15 per month for the first three months of service with a two-year agreement.
Clearwire’s network speed claims are faster than most commonly deployed wide area wireless services and on par with Nextel’s limited deployment of Flash-OFDM-based data services in North Carolina. More importantly, analysts note, is that Clearwire service is priced competitively.
“I’m surprised by how aggressive they are pricing the service,” said Eddie Hold, vice president of telecom services at Current Analysis. “It’s in line or a little cheaper than DSL or cable and more than half the cost of other wireless services.”
Clearwire also offers customers HomePlugs, which enable users to connect multiple computers to the network using a single modem. HomePlugs are plugged into electrical wall outlets and use the existing electrical wiring to share the signal from the modem.
Unlike previous attempts to launch high-speed wireless data-only services that ended up proving financial disasters-including Monet Networks, Ricochet Networks, AT&T Wireless Services Inc.’s Project Angel and Sprint Corp.’s ION service to name a few-analysts give Clearwire a better chance of survival. That optimism is directly attached to Clearwire not only having very deep and well-respected pockets, but that the wireless data market is more mature than it was even a couple of years ago.
“You can never underestimate when Craig McCaw is involved,” Hold warned. “If it was someone else running the company, it would be easy to brush them off and start counting the days until it fails.”
McCaw’s name also was likely a driving force in Clearwire selling off more than $160 million in common stock to 23 unnamed investors in nine states in the past several weeks. The largest group of investors were from McCaw’s home state of Washington, where a number of his former partners and employees at McCaw Cellular still reside.
McCaw, who has also seen a number of his wireless ventures prove less than profitable, acknowledged the challenges inherent in launching the service earlier this year while speaking at the Wireless Communications Association International show.
With a number of wireless broadband-based technologies set to launch over the next several years, including services from traditional wireless operators as well as advanced 802.16 and 802.20 specifications, McCaw’s caution could be the deciding factor in the success of his latest venture.
