Sprint Nextel CEO Dan Hesse downplayed the financial problems of Clearwire on Tuesday, and said Sprint may yet invest more money in the company.
Last week, Clearwire announced it would take several significant steps to conserve cash, including laying off 15 per cent of its workforce and forgoing marketing and retail stores in some upcoming network launches. The moves were announced as the company reported a third-quarter loss of $US139 million. Sprint owns just over 50 per cent of Clearwire and resells access to its WiMax network.
Clearwire has said it is in discussions with its major shareholders and third parties to secure funding for network expansion beyond its current build plan. In answer to a reporter's question at the Open Mobile Summit in San Francisco, Hesse characterized Clearwire's moves as a required response to accounting rules.
"If you get to the point where you don't have 12 months of cash in the till, even if you've got negotiations going on, or what have you, you have to, from an accounting perspective, say you have a going-concern issue," Hesse said.
"That doesn't mean that Sprint and other partners won't continue to fund Clearwire," he said.
All mobile operators are struggling with how to make more money, Hesse said. One growing problem is that devices are becoming both more costly and more important for attracting and keeping subscribers, he said. Carriers are subsidizing $600 devices to bring prices down below $200, he said.
"Subsidies are going through the roof in our industry," Hesse said. About 60 per cent of the new devices Sprint is selling now are smartphones, he said.
Meanwhile, Sprint is looking toward future generations of WiMax for faster network speeds and lower latency, Hesse said. The next step beyond Clearwire's current technology will have as much as three times the speed and shorter delays, Hesse said. He called it WiMax 1.5 or IEEE 802.16-plus, an apparent reference to IEEE 802.16e-2009.
WiMax 1.5 appeared in the middle of a road-map slide in his presentation that showed the current WiMax 1.0 on the left and WiMax 2.0, or 802.16m, on the right. The 1.5 version will boost speeds to between 40M bps (bits per second) and 150M bps, while WiMax 2.0 will deliver 128Mbps to 360Mbps.
Those capacities apparently are to be shared among all the users near a base station, because the slide listed the current WiMax at 25Mbps to 50Mbps. (Clearwire advertises average real-world speeds of 3Mbps to 6Mbps.)
"We're testing the one, actually, in the middle, which should give much faster speeds," Hesse said. He didn't specify whether it is Clearwire or Sprint itself that is testing the technology. The slide showed WiMax 1.5 in the 2011-12 time frame.