Some observers continue to worry about Clearwire's prospects from a financial, rather than operational standpoint. At the very least, there remains an underfunded business plan. Clearwire says it is $2 billion or so. Assume Clearwire is correct. That money still remains to be raised.
On the operational front, early 60 percent of domestic markets are EBITDA positive. Of course, any veteran of the competitive communications business will understand what that means and doesn't mean.
It doesn't mean Clearwire is making a profit in those markets. New national networks, even of the more-affordable wireless sort, are hugely expensive. Cash flow is important, though, and a reasonable measure of progress.
The issue is that nobody builds a new broadband network these days expecting to survive offering a single service, no matter how compelling. Multi-service bundles are the necessary requirement when penetration levels are expected to be modest, so VoIP is getting more attention these days over at Clearwire.
The issue will be whether Clearwire can garner enough revenue operating essentially as a "3G with voice" operation or "broadband with VoIP" business until the next wave of applications and devices start to get traction.
Some of that Clearwire can influence, but not all. If I had to guess, I'd bet that robust wholesale services ultimately will make the difference.
Friday, May 16, 2008
Clearwire "Time to Cash Flow" Issues
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
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