Meanwhile, rivals using or planning LTE continue to surround the carrier. Even Sprint Nextel, the majority owner of Clearwire and the main reseller of its service, recently announced plans to build and run an LTE network for satellite-cellular startup LightSquared if that company gets U.S. Federal Communications Commission approval. Sprint would get credits for capacity on that network. Some analysts question where Clearwire would find major wholesale customers unless the merger between T-Mobile and AT&T fails regulatory scrutiny and leaves T-Mobile without an LTE option. Any viable partner to Clearwire would need a 3G network to provide coverage beyond Clearwire's current network, which reaches only about 135 million U.S. residents.
"It's going to be a while before anyone like AT&T or Verizon desperately feels the need to purchase this capacity," said analyst Tim Farrar of TMF Associates.
In fact, with Clearwire already selling wholesale 4G capacity and LightSquared lining up to do the same, the market is looking crowded, Farrar said. Though spectrum and capacity are already constrained or expected to be soon, most of the big U.S. carriers prefer to use their own networks if they can, he said. Network reach and quality are key differentiators for mobile operators in the U.S. Network-sharing is more accepted in Europe because coverage there is so pervasive that carriers don't use it to attract subscribers, he said.
Also, Clearwire will remain in a technological minority because it plans to use a different form of LTE than the one adopted by Verizon, AT&T and most other carriers so far. It will use TDD (Time-Division Duplex) technology, which uses a single channel for both upstream and downstream traffic, instead of FDD (Frequency-Division Duplex) which uses separate channels. The device ecosystem for TDD-LTE is less advanced than that for FDD-LTE, said Tolaga Research analyst Phil Marshall. However, China Mobile and some other carriers and vendors have shown interest in this form of the technology.
The bright side
Clearwire does have a few things going for it and a potential solution to its problems.
The carrier's huge spectrum holdings, which exceed 100MHz in most of its markets, give it an edge over other service providers. It plans to start off operating its LTE network on 20MHz of spectrum, which would help it deliver those 120Mbps peak speeds, and it will add another 20MHz if needed.
Clearwire has enough spectrum to keep its WiMax network running indefinitely after LTE is launched, and has not announced any plans to shut it down. LTE would be only an addition to the infrastructure, which costs less than building the system from scratch. In some cases, the company expects to add LTE with only new line cards in base stations, though at older sites new radios and antennas will be needed. Also, Clearwire already has wired backhaul links and leased tower space that in many cases can be reused for the new network, its executives said.
Though running two networks adds some costs, "the best option for (Clearwire) probably is to keep both of them for some years," said analyst Monica Paolini of Senza Fili Consulting. But even if the company eventually shuts down the WiMax network, the transition doesn't have to be very disruptive for Clearwire or its subscribers, she said.
"They need to start with the devices as soon as possible, and they need to convince the vendors" to make multimode handsets, data cards and other equipment, she said.