Clearwire - is it really that Clear?
Christopher Carter
I have enjoyed reading the articles and comments by pundits about the recent Clearwire:Sprint, et.al. hook-up to create a national WiMax network. Other participants in this love fest include Google, Comcast, Time Warner and Intel. Hope I haven't forgotten anyone. The pundits, news media and bloggers talk about data speeds, 3G Vs 4G, LTE Vs WiMax and a variety of other factors one can analyze. While this is all well and good let's put out there the obvious - how will these prima donna's of their respective industries ever agree on a strategy and business plan that meets everyone's objectives? The cable companies are investing $1.0B each, Google about a half billion and Intel somewhere in the same range. On paper the combination makes sense. In reality the self-interests of the participants will overshadow the execution of the business strategy. I harken back to my days working for the Tele-TV JV between 3 RBOCS and Creative Artisits Agency. The JV was formed to develop a service for one platform and to take advantage of economies of scale in developing and rolling out the service. Almost immediately issues arose with the ability to execute the business plan on that platform. Within one year tests were being performed to evaluate wireless MMDS and advanced fiber technologies while the partners battled other issues in the respective markets and with each other, creating diverging objectives and eliminating the economies of scale the venture was formed to achieve.
As in the TTV JV, this WiMax venture includes participants who are monopolists in their markets, and market leaders in other industries, who are used to getting their way. Stories about the venture never getting off the ground because competing interests could not be resolved have appeared in several industry blogs. Not to mention that by the time this JV rolls out its service (2010 nationwide?) technology will have advanced, that Moore's Law thing, that will undoubtedly force the partners to revisit the business model and their positions/objectives in the JV. Case in point, ask Earthlink about the muni-wifi services they rolled out in several cities, like Philadelphia (look out Anaheim!), that they are now exiting. Maybe it was foolish to think an advertising based model would fund the capital requirements and operating costs of the muni-wifi network. As I always say, financial modeling is an art, not a science. Tell me what picture you want to paint and I can create a model to support it!
I don't mean to be douse the fire with water. I wish the partners the best of luck, especially if they create a viable service that creates competition in the marketplace. I'd just love to be a fly on the wall at the Board meetings of the venture as the partners work to protect their interest and insure they maximize their ROI in this JV.