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Clearwire: Tight Tier 1 Focus

When Clearwire LLC (Nasdaq: CLWR) hits the phones for tomorrow's earnings call, analysts expect the carrier to announce a focus on deploying mobile WiMax in a select number of Tier 1 markets while also bringing the technology to some of its existing fixed wireless markets.

Spokeswoman Susan Johnston tells Unstrung only that the firm will reveal more about its plans during its fourth-quarter earnings call. The Kirkland, Wash.-based operator had said previously that it would update its WiMax rollout plans sometime this quarter.

Analysts are predicting a two-pronged approach to driving mobile WiMax adoption using the roughly $3.2 billion in funding that Clearwire has already received. The company will look to go live in a select number of top-tier markets -- with most of the launches towards the end of the year -- while also trying to upgrade its existing, smaller pre-WiMax markets to the new technology, using a network overlay, by the end of 2009.

"They have to think about how to cost-effectively deploy WiMax with the money they have," says Phil Solis, analyst at Allied Business Intelligence Inc. (ABI) . "I've been hearing more about a focus on Tier 1 cities.”

Eric Kainer, analyst at ThinkEquity LLC agrees, adding that "It'll probably be a small number [of Tier 1 markets] this year, probably 10 or less." He is expecting a new market launch sometime in the second quarter.

Clearwire has so far launched one mobile WiMax market -- in Portland, Ore. -- and inherited the Baltimore market from Sprint Corp. (NYSE: S). The company has talked about deploying new networks in Atlanta, Las Vegas, and Grand Rapids, Mich., in 2009 but said that it would be talking with its board to decide on deployment plans this year. The firm is also hiring more engineers for network rollouts in different areas around the country, but it is difficult to determine when many of those will happen.

ThinkEquity’s Kainer predicts Atlanta will be the next market deployed, while ABI’s Solis notes that the firm has "networks partially up in Boston, Chicago, and Philadelphia." (See Analyst: Clearwire Will Launch Nine in '09 and Clearwire Cloudy on Chicago.)

Both analysts expect Clearwire to put more emphasis on the overlay plan for upgrading its pre-WiMax networks from fixed wireless to mobile broadband. Kainer is expecting that the whole network could be converted "by the end of 2009."

Clearwire already has fixed wireless networks deployed in more than 50 smaller cities in the U.S. and a larger network in Seattle. Converting the existing networks to mobile WiMax could be an effective way to keep old users and add some new ones. (See Clearwire’s WiMax Overlay.)

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