Clearwire's WiMAX Launch

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Nationwide Expansion?

The concern for some analysts is that as well as Clear may perform in Portland, it really needs to operate on a national scale to appeal to the businesspeople likely to be its biggest users. "What [Clear is] offering is very much in demand right now," says Charles Golvin, an analyst at Forrester Research. "You see that in the success of the iPhone. But a lot of that demand today is coming from business users, and a national footprint is very important to business adopters."

Wolff says Clear can do just fine with the 90% of the 1.7 million consumers covered by its network who never leave the local area. "We can really do very well and succeed without having to snap our fingers and go nationwide," Wolff says. In the second half, Clearwire plans to roll out a number of applications and exclusive entertainment content to attract users. But it may be an uphill battle in an economy that's left communications providers struggling to add users.

What Clear really needs to do is launch in more markets. Having merged with Sprint's (S) WiMax efforts, Clearwire plans to rebrand and relaunch a network in Baltimore within several months. But further expansion may happen more slowly than previously anticipated. The company would require additional cash infusion to roll out nationwide quickly, Wolff has said. The company's board of directors will rule on whether to slow the pace of expansion due to tightened credit conditions later this month. Meantime, Clear will pursue business users through dual-mode air cards, due for release some time in the first half, that will let users tap into its own as well as traditional carriers' cellular networks.

Bundling May Attract New Customers

Clearwire also has other products up its sleeve. In the first quarter, the company will start offering a voice service for $25 a month. While that's cheaper than the $40 that Comcast charges for its stand-alone product, it's on par with services from Web-calling provider Vonage (VG). Clearwire may also offer discounts for customers who buy packages of voice and broadband services.

But its competitors offer cheap bundles as well: Verizon already offers a package of digital TV service, home calling, and fixed Web access for $75 a month. So Clear's discounts will have to be steep to attract cash-strapped consumers who may be hesitant to switch to a new service. "We are talking about a mission-critical function in people's lives," says Nick Shore, an independent marketing consultant who's created campaigns for such companies as Motorola (MOT). "For me, to try a new brand is a high-risk proposition."

That said, Clearwire has a good track record: In its existing markets, which don't include Portland, it's managed to grab 25% of the population covered by its fixed service, which has been available for some time, within 18 to 24 months. And the company has powerful backing. Besides Intel, investors include Google (GOOG), Comcast, and Time Warner Cable (TWC). Backers have recently poured $3.2 billion into Clearwire. "It's not just Clearwire, it's people behind it," says Steven Gorki, CEO of a nonprofit educational organization that let Clearwire use some of its airwaves.

In this economy, Clearwire may need more than strong backing.

Kharif is a senior writer for BusinessWeek.com in Portland, Ore.