Clearwire's Backhaul Bet

Clearwire LLC (Nasdaq: CLWR) CTO John Saw says the company can deploy its planned mobile WiMax network in the U.S. for far less than traditional cellular deployments thanks to its work on microwave backhaul and the use of a flat-IP architecture throughout its network.

The "new" Clearwire venture unveiled plans last week to deploy a mobile WiMax network that will cover up to 140 million Americans in 110 markets by the end of 2010. To achieve that, the firm says it will spend up to $5.5 billion, a sum that includes backhaul costs. (See Sprint, Clearwire Create $14.5B WiMax Giant and Clearwire: We'll Kick LTE's Butt.)

Some analysts have suggested that, using traditional cellular metrics, the operator could need to spend up to $12 billion for a 50-market rollout. (See Can Clearwire Do It? and CLWR: Where It's at With WiMax.)

But Clearwire's plans don't match up to those cellular metrics. Saw explains that by using microwave links and an all-IP network (from the device to the wired hub), Clearwire will need to spend far less than established cellular rivals.

As Unstrung has already reported, LTE, WiMax, and all technologies that lay claim to the "4G" name could pose all sorts of operational challenges for operators, especially in terms of backhaul. They're looking to support base stations that can connect devices at up to 50 Mbit/s, and that could evolve to 100 Mbit/s over time to meet the 4G requirement.

This means operators will no longer be able to rely on T1 lines to connect cell sites back to their core networks. Instead, they will need to deploy faster alternatives, such as microwave radio links and fiber optical connections, to meet bandwidth demands.

"It's what I call the elephant in the room that nobody talks about," says Saw. "The backhaul is probably the highest cost of deploying the network... Anyone who wants to roll out a real wireless broadband network nationwide needs a cheaper solution" than current models.

Saw says that ever since Clearwire started deploying pre-WiMax services in 2004, the company has focused on microwave as an effective backhaul transport mechanism. Ninety percent of the company's cell sites use "wireless Ethernet" backhaul links. The entire Clearwire pre-WiMax network currently supports 443,000 users.

"Today we have the largest wireless backhaul network in the U.S.," Saw claims.

The operator runs the microwave links in licensed 18 GHz and 24 GHz bands, as well as some unlicensed 5.8 Ghz backhaul. The 5.8 Ghz is still relatively free from interference, according to the CTO.

The microwave mania will continue when Clearwire combines its assets with Sprint's Xohm operations, something that should happen by the end of this year, depending on regulatory approval for the new Clearwire. (See Clearwire: In Depth With Barry West.)

"We intend to be using a lot of wireless backhaul," Saw notes. This won't, however, stop the CTO looking at fiber for the right price in the right markets: "To build a nationwide broadband network you need a lot of arrows in your quiver."

The company's work on a flat-IP architecture will also help it shave dollars off its costs, according to the Clearwire exec. In a wireless world, one of the promises of pure IP network designs is that an operator runs VOIP on a packet-based network rather than having to support a legacy voice network, a complex scenario that involves building a data overlay and developing interfaces between the two. (See Flat Is Back: Toward the All-IP Mobile Network.)

"I'm climbing the tower one time and I'm taking Ethernet up there with me. It's a capex up-front issue; the opex is very little... Their [the cellular operators] cost is going to be significantly higher."

Saw says, however, that one of the issues of deploying a pure IP network -- from the device to the backhaul connection -- has been ensuring the reliability of the connection throughout the network. The operator launched VOIP services on its pre-WiMax network early this year, usually a good test of latency, jitter, and other network performance issues.

"It's a lot cleaner and easier to run VOIP over microwave Ethernet," says Saw of the his experiences so far.

As the joint venture kicks in through 2009, however, the Clearwire model will still require heavy up-front spending. The Kirkland, Wash.-based operator actually reduced its capital spending in the first quarter of this year to $53.1 million, compared with $74.4 million in the same period in 2007. The capex figures are likely to grow again as Clearwire prepares initial mobile WiMax-enabled markets for launch later this year. (See Clearwire's Loss Gets Bigger.)

— Dan Jones, Site Editor, Unstrung