The Strategy Analytics Broadband Network Strategies analysis of WiMAX providers Clearwire and Towerstream suggests that their recent public offerings—rare among US wireless broadband service providers—are a necessary, but insufficient, step toward market success. The report, “WiMAX Service Providers Go Public: Ready for Prime Time or Looking for a Greater Fool?” 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 Sprint Nextel’s WiMAX network.”
Clearwire has recently expanded into major US markets, after starting out in smaller cities. “The home broadband 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.