Clearwire Clears $1.26 Billion in Funding

By Eric Griffith

July 06, 2006

The company won't bother with an IPO when companies like Intel and Motorola have its back with a new $900 million investment.

High-speed wireless broadband provider Clearwire already had $360 million in its coffers, enough to get its pre-WiMax services deployed in several cities. Today, it added another $900 million in venture capital funds, including $600 million alone from Intel Capital. The rest is coming from Motorola Ventures.

In addition, the company sold its NextNet Wireless subsidiary to Motorola without reporting the sale price. NextNet makes non-line-of-sight (NLOS) broadband equipment.

In the end, this puts Clearwire, Intel and Motorola together to "hasten the proliferation of mobile WiMax (AKA 802.16e-2005) in PC clients," according to a statement, as well as jointly developing the next generation of WiMax equipment —which Motorola's new NextNet will supply to Clearwire for deployment.

This investment puts the skids on Clearwire's planned initial public offering (IPO) of stock, originally announced in May of this year. The company withdrew the plans July 5. They don't need the money — the $900 million in funding is more than double the $400 million expected from the IPO.

This is Intel's second investment in Clearwire. The chip giant is betting on WiMax in a way that far outstrips the support it gave Wi-Fi, which was an established technology at the time Intel Centrino started to arrive in laptops (the company bet on HomeRF early on). By putting even more money in Clearwire, it increases the chances of  mobile WiMax becoming a market reality that will sell Intel's WiMax chips in the future.

Sean Maloney, executive vice president and general manager of Intel's Mobility Group, said in the announcement, "Wi-Fi has become an essential part of people's lives. WiMax is next. It is rapidly moving from a technology initiative to real deployments." He told the New York Times that there are 175 tests currently underway worldwide using WiMax technology.

Centrino-based laptops with WiMax could arrive by the end of 2007. Intel's Rosedale 2 chips are due this year, and will support both fixed and mobile WiMax.

Clearwire, founded by cellular pioneer Craig McCaw (who sold his company to AT&T in 1994), was initially launched in Jacksonville, Florida in June 2004. Since then, service has expanded to 200 cities and towns in the U.S. as well as countries like Ireland, Belgium, Denmark and Mexico (some in partnership with other providers). The company has 18,000 subscribers in the United States. Clearwire has yet to turn a profit; it burned through $140 million in 2005 alone. Clearwire broadband prices range from $20 a month for basic service (called ClearValue) to a business package with 1.5Mbps download speeds for $50 a month; each requires a $5 per month fee to lease the customer premises equipment (CPE) needed to receive a signal.

In May, Clearwire started a VoIP phone service in select markets, providing unlimited calling in the U.S., Canada and Puerto Rico for $30 a month. The company also has a deal with AOL to provide AOL High Speed service for $25.90 a month.  

Glenn Fleishman on his Wi-Fi Networking News blog notes that Clearwire's spectrum portfolio in 2.5GHz — a necessity for running mobile WiMax, which doesn't use unlicensed bands like Wi-Fi — is second only to Sprint Nextel in the U.S. The current Clearwire licenses give it the ability to bring WiMax to as many as 90 million American citizens when fully deployed. Fleishman says that having Intel's attention and investment will make all the difference, the only caveat to Clearwire's success being "whether they can acquire enough customers at the right price to turn a profit."



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