Ina Fried

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Interview: Clearwire CEO Sees 4G Opportunities Where Rival LightSquared Stumbled

With rival LightSquared running into interference, Clearwire sees an even bigger opportunity for itself to offer a 4G network to others.

“Our spectrum is clean, it’s contiguous, it’s deep and it doesn’t suffer from interference issues,” CEO Erik Prusch said in an interview at Mobile World Congress in Barcelona.

It’s been a rough go for Clearwire, however. In addition to shifting its focus from one wireless technology to another, Clearwire has also cut costs, pared its workforce and outsourced some network operations to Ericsson.

And that’s not to mention the turmoil on its board and in its executive ranks.

But Clearwire has something that its rivals are running out of: The wireless spectrum needed to operate their networks.

“It’s a valuable asset,” Prusch said. “We expect it will continue to appreciate. This is really the fuel for the business model.”

So far, Clearwire’s main wholesale partner is Sprint, which owns about half of the company. Clearwire also has deals with Best Buy and NetZero, among others. But Prusch said that there is a reasonable chance one of the other major operators will want to strike a deal with Clearwire, given the company’s amount of spectrum and capacity.

“I think it is quite conceivable we can continue to sign up customers,” he said.

One potential partner would be Deutsche Telekom’s T-Mobile USA. T-Mobile isn’t seen as having enough spectrum on its own to launch LTE, but said last week that it plans to start offering such service next year. Prusch wouldn’t say if the two firms are in talks.

“I won’t want to comment on who we are having conversations with,” he said.

For its part, Clearwire is in the midst of a major transformation. The company initially built its 4G network around WiMax. That let it beat other rivals to market with next-generation technology, but proved thorny as LTE showed itself to be both more popular and efficient for the long term.

Clearwire is now working to build its own LTE network, with hopes of having 5,000 sites by the middle of next year. While Clearwire is using a different version of LTE than the one adopted by AT&T and Verizon, Prusch said its so-called TDD LTE will be the more common one globally.

Although the company could always sell off part or all of its valuable spectrum holdings, Prusch said the main goal is building out its 4G LTE-based network.

“We believe with the absence of spectrum available in the U.S. in the foreseeable future, ultimately we will be best served by serving a lot of wholesale partners,” Prusch said.

Indeed, the lack of spectrum has left many rivals beating down the doors in Washington to quickly auction off additional airwaves.

“We’re not asking anything of regulators,” Prusch said, adding that he doesn’t really think that there is enough spectrum to be auctioned to truly be a game changer.

In addition to selling space to carriers, Clearwire also markets its service to consumers. However, in the past year it has switched from a contract business, in which it bore upfront costs to subsidize devices, to a less cash-intensive prepaid model.

Operating its own network, Prusch said, allows Clearwire to see how customers use the network, what problems they encounter and, more importantly, what services they like and use. And by offering an unlimited service, Prusch said he hopes Clearwire’s customers will push the industry toward needing the kind of high-capacity, high-speed service it can offer.

Despite its changes, a renewed deal with Sprint and a massive infusion of cash last year, Prusch acknowledges the company could yet need more capital to fully build its network.

“We feel like we have enough money to start this build and get well down this path,” Prusch said. “Networks cost money to build. We don’t expect to stop here, which may require additional capital.”

Update: I originally had my LTE standards reversed. Clearwire uses TDD-LTE, not FDD.

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