December 2, 2008
Credit Crunch Slows Clearwire Plan
The credit crunch is slowing down a high-speed WiMax wireless network backed by Clearwire Corp, according to Chief Executive Benjamin Wolff.
The company received 3.2 billion from Intel Corp, Comcast, Time Warner Cable Inc, and Google Inc, but Clearwire still needs another $2 billion or more to build its network.
Clearwire shares rose 15 percent in Monday's trading, after the firm finished its venture deal with Sprint Nextel and other partners on Friday.
However, credit markets have deteriorated rapidly since Clearwire announced its high-speed plans in May.
"If we could raise money in the middle of next year, end of next year, even early 2010 that would be plenty of time to continue on the pace we talked about before," Wolff said.
Seven months ago, Clearwire planned a network that could reach 140 million people by the end of 2010 using WiMax, an innovative technology that promises to blanket entire cities with high-speed wireless Internet services.
Wolff said he believes the company is more than two years ahead of rivals in wireless services and therefore could afford to slow down its network plan if need be.
"If we build more slowly, it causes the funding gap to come down," he said, adding that the slower it builds the network the easier it is to expand into new markets using revenue from existing services.
"We're competitively in a very good space. I don't feel like we have to get the company in a situation of needing to raise capital prematurely given this market environment," he said.
Clearwire wants to upgrade its existing wireless service in 46 markets to WiMax by the end of 2009.
However, Wolff said some markets could slip into 2010 if the company does not receive required permits on time.
The company's cable partners are expected to offer wireless services under their own brands using the Clearwire network.
Time Warner Cable officials said Monday the company is expected to offer limited WiMax services using the Clearwire network in one or two markets in late 2009 or early 2010.
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