Wi-Max technology provider Clearwire, founded by cellular phone pioneer Craig McCaw, announced an initial public offering of $400M that will cap $1B in private investment amassed over the past several years.

This is significant as Clearwire’s Wi-Max technology represents a viable low-cost alternative to cable broadband, or DSL-using wireless technology to bridge "the last mile" in high-speed Internet services with the potential to create some real competition in the space

Steve Sechrist
Senior Analyst and Editor
of Projection Monthly &
Microdisplay Report

"It’s very good news," said Ron Resnick, president of the WiMax Forum, an industry trade association quoted in a recent Seattle Times article. " What Clearwire has done [by filing for an IPO] is support the foundation of the argument that we are all trying to make — the world is changing and the market opportunity is ripe right now to grab business for wireless broadband."

For McCaw this is not new territory, as the technology is similar to cellular service; it requires towers and broadcasts a signal over licensed airwaves to a wireless modem that can be plugged into a desktop computer, laptop, or local network. It works by transmitting signals to and from nearby cellular towers instead of using a cable modem riding on the traditional cable TV feed or POTS phone line. Users not only gain low-cost broadband access, but setup flexibility and portability of wireless anywhere in the home, with no "cable guy." Best of all, the technology represents a viable substitute to the current duopoly pricing from DSL and cable providers.

Implications of this approach are likely sending shudders down the spines of entrenched cable and DSL executives, with the specter of lighting up whole neighborhoods into virtual Wi-Fi-like hot spots - circumventing traditional wired broadband solutions entirely. On the bandwidth front, Clearwire expects a 1.5 to 2 mbps data rate, fast enough for video streaming of standard definition (SD) IPTV when encoded using MPEG-4. HD feeds over broadband however requires 6 to 10 mbps speeds so this content would not be streamed, but cashed onto a hard drive for later playback. The wireless connection will also support VOIP technology via a Vonage or Skype modem as well as traditional high-speed Internet access giving a robust value proposition to Clearwire customers.

The private company is being watched closely by industry insiders (including us) but the Securities & Exchange Commission (SEC) filing helped clear up some questions about Clearwire’s position in the industry. For instance, in the SEC filing, Clearwire confirmed that it has the second-largest spectrum position in the US, trailing Sprint Nextel. The company also said if things go according to plan, it will have enough capacity to serve up to 90M people. The company currently has 88,000 US subscribers and about 11,500 subscribers in Belgium and Ireland.

Our take: McCaw is nothing if not a consummate technology visionary with a successful implementation track record. He made his first billion dollars ($11.5B) by first building then selling one of the first national cellular networks transforming the "ship-to-shore" era in mobile telecommunications and ushering in the "cellular age."

In a not too different environment today, McCaw must again find subscribers willing to buy-into his unique brand of wireless access-this time for high-speed Internet services. His purchase of NextNet Wireless secured the essential ODFM (Orthogonal Frequency Division Multiplex) delivery technology, and in a deal inked with Best Buy, McCaw created a novel selling strategy where Clearwire is marketing direct wireless broadband, with a kind of "fast-food" instant gratification approach consumers crave.

In short, this is one technology IPO to watch with great anticipation. –SS