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Worst of the Week: Chicken and Bacon

Hello! And welcome to our Friday column, Worst of the Week. There’s a lot of nutty stuff that goes on in this industry, so this column is a chance for us at to rant and rave about whatever rubs us the wrong way. We hope you enjoy it!

And without further ado:

Is anything ever easy for Clearwire?

Late last week, everyone’s favorite WiMAX provider reported yet another quarter of “things will be better tomorrow … if …” results that have become all too common for Clearwire. What was once a company at the leading edge of the “4G” marketing revolution has quickly sunk to the bottom of a rapidly filling bathtub.

More troubling than its ongoing results was the fact that the company also announced plans to push back its LTE deployment plans from 8,000 towers by mid-2013 to just 2,000 towers. The company said the move was to better align itself with Sprint Nextel’s need for Clearwire’s 2.5 GHz-powered LTE services, but it seems to be more of a game of chicken in which Clearwire is pressuring Sprint Nextel to participate in more of the costs involved with that deployment.

And why not? Sprint Nextel looks set to garner a significant financial boost from Softbank, which announced last month plans to invest up to $20 billion in Sprint Nextel for a 70% controlling stake in the carrier. With Softbank a strong proponent of 2.5 GHz LTE services in its native Japan, things look to be lining up pretty well for some of that funding to make its way towards Clearwire.

However, at least publicly, Sprint Nextel and Clearwire continue to maintain a somewhat adversarial relationship with each other that seems to indicate that such a transfer of funds is not a done deal. Sure, both carriers go to great lengths at times to espouse the benefits the other has for their operations, but this is often followed by statements that emphasize each operator could continue without the help of the other.

This high-stakes game of “chicken,” while fun to watch, does not seem to be doing either carrier any good. At a time when Sprint Nextel needs to be laser-focused on expanding the reach and capacity of its LTE network, and Clearwire needs to be rolling out LTE just to get the taste of WiMAX out of its mouth, both are instead driving their respective tractors at each other, hoping the other blinks first.

Everyone knows that Sprint Nextel has a near-term spectrum constraint that will see it limited in supporting its LTE network. As long as customers trying to access the limited scope of that network, that is not an issue. Though, the carrier’s continued grasp on its unlimited data offering could hasten that capacity collision.

And for Clearwire, while the carrier has valiantly tried to convince the public that its near-bottomless barrel of spectrum assets is what really matters in the end, but having that spectrum sitting on the promise of tomorrow is not the way to attract business. Plus, Clearwire has been unable, at least publicly, to garner interest from anyone for a financial jolt outside of Sprint Nextel. Heck, even its early investors have decided to cut bait.

Look, both carriers obviously need each other if they expect to have any chance of competing against bigger rivals – in the case of Sprint Nextel, or to remain an appealing option for spectrum-starved carriers – in the case of Clearwire. And I understand that with billions of dollars at stake, both sides feel some need to placate the short-term needs of shareholders. Though, even some of them are not buying this charade.

“Although we understand [Clearwire’s] rationale for delaying the capex spend, it is our understanding that [Clearwire’s] large partners are not going to ‘believe it until they see it,’ and are unlikely to provide further cash injections until [Clearwire] has working LTE sites,” noted Macquarie Equities Research in a report following Clearwire’s release of Q3 results.

All these two are really doing is sabotaging their own chances at remaining a viable competitor in a market quickly running out of time and space for viable competitors. Again, fun to watch, but in a sad sort of way.

While you have to admire the bravado being shown by each company’s respective leaders, in the end no one wins in a game of chicken, except maybe Kevin Bacon.

OK, enough of that.
Thanks for checking out this week’s Worst of the Week column. And now for some extras:

–No pressure on T-Mobile USA or anything, but its soon-to-be partner MetroPCS posted third quarter results this week showing definite strain in trying to compete for customers in the market place. The carrier said it lost more than 300,000 customers during the three-month period, or roughly 3% of its customer base. This is nothing really new for MetroPCS, or other no-contract carriers for that matter, which seem to fluctuate greatly between quarters of customer feast or famine.

However, with T-Mobile USA itself also showing signs of bending under the strain of competition, the thought of combining two struggling entities looks even more daunting.

–GreatCall, which has carved a niche for itself in the mobile space for its Jitterbug service by attempting to simplify the wireless experience for those that miss their rotary-dial phones, this week took the ultimate challenge by beginning to offer a smartphone to its “experienced” user base.

The company has begun offering the “Jitterbug Touch” device, which is a Kyocera smartphone running Google’s Android OS. I say good luck on that front. I am sure there are many Jitterbug customers capable of mastering the intricacies of a mobile operating system, but from personal experience, this could be a tricky proposition.

Luckily, Jitterbug offers a handset replacement feature for $4 per month that is designed to cover a “lost, stolen or broken” device, incidents that I will wager could be a common and mostly rage-induced.

I welcome your comments. Please send me an email at [email protected].

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