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1/30/2009
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Don't Hold Your Breath Waiting On WiMax

Nortel's officially out of the WiMax game and with capital evaporating, Clearwire's ambition to expand beyond two cities look precarious.

Nortel's officially out of the WiMax game and with capital evaporating, Clearwire's ambition to expand beyond two cities look precarious.Clearwire launched its WiMax network in Portland, OR earlier this month using the Clear brand name. The launch had a gala quality that seemed disproportionate to the gravity of the announcement. The live video chat with since embattled Portland mayor Sam Adams was perhaps the least flashy, but the vehicles wrapped in the Clear logo, the onslaught of demo stations that was quasi-Interop worthy, the truck with the fishbowl living room, and the fleet of shuttle buses squiring journalists around the city to "test" the connection were over the top. It smacked of desperation.

A few weeks time hasn't eased the desperation -- Clear is still in blitz mode. This week, I found myself staring at a building height Clear billboard (with the misspelled tagline), a Clear store complete with sign wavers out front, a Clear TV spot, and then another Clear store -- there are 5 in the Portland Metro area (and I think that doesn't include one I drove past that's not on the store locator list yet).

So now Nortel's out of the WiMax business and while they weren't in the consortium, it's another blow to the perception of WiMax viability. Clearwire CEO Ben Wolff acknowledge at the launch event that launching the WiMax service into any given metro area took approximately 2 years (due permitting and zoning). The delays in planned WiMax rollouts for Chicago and Washington, D.C. underscore how challenging any true national rollout of WiMax will be even under the best of circumstances.

Cost compounds the time issue. Putting up those towers isn't cheap, which is where the confidence issue comes into play. With the exception of truly local businesses that never stray for the home zone, WiMax is questionable at best. There's a hardware investment, plus the service cost, and the very real possibility that mobile WiMax doesn't have staying power commercially speaking. A -- that would leave business owners in Baltimore and Portland holding worthless hardware (like some Nortel customers) and re-upping with exactly the same service provider they use today. That's a tough sell for any business trying to trim costs (and what business isn't right now?).

Can the investors wait? Intel, Google, Sprint, and Comcast are bound to be getting antsy about recouping their collective $3.2 billion investment. There's chicken and egg scenario at play, but "if they come we will build it" won't work here and the recession may spell doom for Clearwire building its WiMax network fast enough to convince businesses to come to them.

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