This Week in WiMax
11:05 AM -- This week in WiMax, here are the big issues, as I see them:
Don't expect too much from Clearwire's Q3 subscriber adds
When Clearwire LLC (Nasdaq: CLWR) reports its third-quarter earnings Nov. 10, don't be too surprised if the company's all-important "net subscriber adds" count is still embarrassingly low.
Remember last quarter, when all Clearwire would say is that across all its networks, it only added 12,000 new subscribers? It's hard to see how the numbers for Q3 will be much better, especially if it turns out that subscribers from Clearwire's old pre-WiMax network have left at a faster rate than the company can sign up new users of its mobile WiMax "Clear" services.
Though we've campaigned for it before, we don't expect Clearwire to break out its numbers by old and new network users -- not when it still behooves the company to cloud things up as much as it possibly can.
What do we mean by that? When Clearwire started selling real mobile WiMax this January in Portland, Ore., it had 475,000 subscribers to its old pre-WiMax services, which were sold in roughly 50 smaller markets. At the end of the company's second quarter of 2009, the total number of subscribers to networks new and old was 511,000. Since then, Clearwire has only really fully launched two more new big markets, Las Vegas and Atlanta. Most of the company's other market launches are in smaller towns (like Lubbock, Texas, est. population of 218,000) where even if Clearwire was on fire, the numbers wouldn't be so big as to notice. If Clearwire were to break out old and new network subscribers, we'd get a very Clear picture of how Clear is selling -- and how fast its old customers are leaving. Since neither of those numbers is likely to make Clearwire look good right now, expect to hear only a simple total of all subscribers and a single number for net additions -- or net losses.
It's not as if any of this should come as a surprise, since during that somewhat disastrous second-quarter call, CEO Bill Morrow had to basically guarantee that the company's fourth-quarter subscriber adds would be greater than the total of the first three quarters combined. Not too tough a job, really, with Chicago and Dallas markets probably going live Nov. 1 to join Philadelphia, where Clearwire has been selling services online since Oct. 1. It's safe to guess that whatever number Clearwire reports for Q3, it's not going to raise the bar for the fourth-quarter total too much higher. With the bigger markets coming online, and aggressive promotions (like the current half-price deal that gets you an unlimited WiMax service for as low as $22.50 per month), Q4 will be when Clearwire really starts showing whether or not its service is something that people will pay money for.
The real interesting numbers (if they ever get broken out) to watch over the next quarter or two are the subscribers added by Clearwire's big reseller partners, namely Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Sprint Corp. (NYSE: S). Since Sprint didn't bother to break out its 4G subscriber adds during its quarterly call this week, it's a safe guess those signups are going slowly as well, so there won't be a big Sprint bump for Clearwire in Q3. But with Sprint launching a whole slew of 4G markets in Q4, and Comcast scheduling promotions for big markets like Chicago, it's possible that the majority owner and one of the billion-dollar investors in Clearwire could give WiMax a big boost. We just won't know until next spring, not this month.
Need to know more about Clearwire and WiMax? Our second version of the Clearwire NTK report, which covers Clearwire events from June through September, costs less than a large beer at the local Sprint Nascar race. Just $4.95 at the Sidecut store. Also available for the Kindle. Available now for free download is our WiMax Business Deployment Guide.
— Paul Kapustka is the founder and editor of Sidecut Reports, a WiMax analysis site and research service. He can be reached at [email protected]. Special to Unstrung.