Wireless broadband carrier Clearwire needs more money, and previous backers have agreed to kick in $1.5 billion more, the WSJ reports. The round could be announced “as soon as this week” — perhaps during Clearwire’s Q3 earnings report on Tuesday afternoon.
These investors include its biggest outside investor, Sprint Nextel, which is investing another $1 billion. It also includes Intel and a coalition of cable companies, including Comcast and Time Warner Cable, which are all contributing toward another $500 million.
But Google, which invested $500 million in an earlier round of Clearwire’s financing, is sitting out of this round, according to the WSJ. (This makes sense, as while Clearwire and its Sprint and cable partners are already planning commercial service offerings, Google probably isn’t, and sees Clearwire mostly as a strategic investment.)
Clearwire’s main idea is that it’s the first company rolling out super-fast 4G wireless Internet access in the U.S., while traditional wireless carriers are still rolling out slower 3G service. But it has hardly gone smoothly, and there doesn’t seem to be enormous excitement from consumers for its services.
One problem: Delays are costing the company dearly in the “first to market” category. While Sprint had initially planned to blanket much of the country with 4G by 2007, it’s almost 2010 and only a small handful of markets are being served, such as Baltimore, Portland, Ore., and Las Vegas. (Meanwhile, the wireless industry is catching up quickly. Top carrier Verizon Wireless is planning its own 4G network to begin testing this year, and assuming no drastic delays, it could open for commercial service next year.)
Another problem for Clearwire could be that the rest of the industry seems to be siding with newer wireless technology that’s incompatible with Clearwire’s network. For example: Verizon’s network, and all other 4G networks announced so far, will use a technology called LTE, which is incompatible with the WiMax technology Clearwire uses. If wireless gadget makers — especially Apple and other hot companies — turn their noses at WiMax and focus mostly on LTE gadgets, that could be bad for Clearwire.
We’ll find out how early sales in new markets have gone tomorrow, when Clearwire reports Q3 results after the bell.