Clearwire Clouds VoIP Picture

By Ed Sutherland

March 31, 2005

Broadband wireless startup, Clearwater, recently formed a $100 million partnership with Bell Canada to sell VoIP services to its customers. Now some of those customers are complaining that Clearwater is blocking their third-party VoIP service.

Clouds may be on the horizon for high-profile broadband wireless startup Clearwire Corp. Led by cellphone mogul Craig McCaw, the Kirkland, Wash.-based Clearwire is weathering a storm of criticism over its policy limiting subscriber access to VoIP.

Following its $100 million deal with Bell Canada providing U.S. customers WiMax-based private label VoIP, Clearwire is now defending itself against charges of blocking outside IP telephony and other popular broadband services.

VoIP services, such as those from Vonage can be "problematic" for wireless networks, according to Gerry Salemme, executive vice president of Clearwire. Outside VoIP services could harm or even "bring down the customers" of Clearwire, Salemme told reporters.

(Clearwire failed to return calls from Enterprise VoIP Planet reqesting interviews for this story.)

VoIP provider Vonage said a number of Clearwire subscribers reported access to the IP telephony service blocked. The incident was resolved when Vonage changed the SIP port used by the subscribers' equipment.

Lame excuse?
"Clearwire's excuse for blocking VoIP traffic on its network is, in a word, lame," Joe Laszlo told Enterprise VoIP Planet. Laszlo, a broadband analyst for Jupiter Research, says the port blocking calls into question Clearwire's future as a VoIP provider.

"VoIP traffic is not especially bandwidth-intensive, and the claim that usage of VoIP somehow compromises a wireless broadband network is, on the face of it, pretty absurd," says Laszlo.

Central to the controversy is a terms-of-service agreement forbidding many bandwidth-intensive applications from the wireless network, including VoIP.

"The more applications a broadband service provider blocks, the less appealing its network is going to be for consumers," adds the analyst.

"At the very least, it raises some huge questions about whether Clearwire's service is ever going to be competitive with cable modem and DSL services," says Laszlo.

"Clearwire may have to come up with some sort of excuse that it's not all VoIP traffic that's harmful, just VoIP it doesn't control," says Laszlo. "But that sounds very much like making up a technical justification for what's really a revenue-based decision," according to Laszlo.

The reports "raises some big questions about Clearwire's recent VoIP deal with Bell Canada," says Laszlo.

Canadian VoIP?
Bell Canada earlier this month announced it will invest $100 million in Clearwire to become Clearwire's exclusive partner for VoIP in the U.S. and preferred IP voice provider outside North America. "This partnership leverages Bell Canada's IP-based network capabilities and Clearwire's leading wireless broadband services," according to McCaw.

Bell Canada will manage the deployment and operation of Clearwire's VoIP service.

The Bell Canada announcement follows an earlier $100 million from Intel for Clearwire to use WiMax. "We are certainly committed to WiMax and believe there is growing and significant momentum that is building around WiMax," says Todd Wolfenbarger, Clearwire spokesperson.

Although unwilling to say when or where the proposed service will appear, VoIP "is an important service for Clearwire and we will offer it in a simple-to-use manner that is consistent with the broadband Internet service we are currently providing today," says Wolfenbarger.

"We will be in at least 20 U.S. cities by the end of 2005," says Wolfenbarger. (Clearwire is currently in only four locations: Daytona Beach, Fla., Jacksonville, Fla., Abilene, Tex., and St. Cloud, Minn. Clearwire has service trials ongoing in Ireland and Belgium.)

"We can access the U.S. 'without crossing the border'," says Daniela Pizzuto, Bell Canada spokesperson. "Work can be conducted from Canada or through existing Clearwire facilities in the U.S. Bell will have no offices in the U.S. and will not need to open any as a result of the announcement," says Pizzuto.

Will VoIP save broadband?
"Clearwire recognizes the need to offer VoIP in a bundled broadband service, " says Keith Nissen, VoIP analyst at In-Stat/MDR. VoIP "is probably the only way for a wireless broadband carrier to make a profit."

"Clearwire is pretty clearly a huge winner in this deal," says Jupiter Research's Laszlo. Bell Canada's VoIP experience wasn't the reason, believes the analyst. "If VoIP were the issue, it would have been far simpler to partner with an established provider like Vonage or Level3, both much more adept at providing VoIP in the U.S.," according to Laszlo.

"It's risky for Bell Canada from the perspective that Clearwire may not prove a successful competitor in the U.S. broadband market," says Laszlo.

Despite the reasoning, the risks, and the paucity of actual details, the VoIP deal between Clearwire and Bell Canada is unusual and intriguing, says Phil Solis, analyst with ABI Research.

A big deal
"This is a big deal: Typically you'd want to pick a local provider," says Solis. "You'll have someone providing VoIP from outside the U.S."

On the other hand, "this is the start of a new trend: It doesn't matter who brings VoIP to you; that's the end-game," says Solis of Clearwire's choice of Bell Canada to support U.S. VoIP.

For enterprise customers, the agreement will encourage data-only providers, such as TowerStream, to offer VoIP, says Solis.



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