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Funded WiMAX Service Providers Next Steps

The Strategy Analytics analysis of WiMAX providers Clearwire and Towerstream suggests that their recent public offerings -- rare among U.S. wireless broadband service providers --are a necessary, but insufficient, step toward market success.

The report notes that both the $600 million Clearwire IPO, and the much smaller $15 million, Towerstream offering, provide much needed expansion capital, yet both companies face extremely challenging business environments.

"The 1990's proved that going public doesn't necessarily mean you have a great business plan," notes Tom Elliott, Vice President of Applied Analytics and author of the report. "It just means you've got someone else's money to back it." He continues, "Clearwire, which primarily serves residential customers, and Towerstream, which focuses on small and medium enterprises, are in very different businesses, but each faces stiff competition both from established access providers and from potential new offerings, such as the Sprint Nextel WiMAX network."

Clearwire has recently expanded into major U.S. markets, after starting out in smaller cities. "The residential broadband access competition in major metropolitan areas between cable operators and telcos is fierce," says David Mercer, Vice President of the Digital Consumer practice. "Clearwire is going to have to fight to grow its customer base."

Towerstream has announced a plan to add two cities a year to its current base of eight, which the report cautions may present a difficult management challenge for a small firm. I believe that the lack of consumer awareness is a major challenge for both these companies. That said, it's an excellent opportunity for them to apply a more intelligent approach to market development.

Hopefully, their sales force won't use the same tired and ineffective cold-calling model as their peer group has applied to date. Considering all the investor funds that were squandered by the fiber-based competitive local exchange carriers, this issue should be a concern for analysts who report on WiMAX deployments.

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