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Clearwire unveils pay-as-you-go 4G

By David Goldman, staff writer


NEW YORK (CNNMoney.com) -- Clearwire on Monday unveiled "Rover," a pay-as-you-go 4G network that it hopes will attract new users to its flailing and unprofitable mobile broadband service.

Rover is now available in all 49 markets that Clearwire serves, which cover about 56 million people across the United States. Clearwire (CLWR) is 51% owned by Sprint Nextel (S, Fortune 500) and is the firm that actually powers Sprint's 4G-WiMAX network. The company's network is concentrated around urban areas, though it lacks some major ones like New York, Los Angeles and Boston.

Customers can buy one of two devices to connect to the service: a $150 "Puck" that serves 4G mobile broadband to up to 8 devices or a $100 USB modem called the "Stick." Users can then buy access to Clearwire's 4G network for $5 a day, $20 a week or $50 a month without a contract.

Clearwire built the nation's first 4G network, but has so far been unable to make any money off of it. It has been hampered by cost overruns and delays in its rollout. Clearwire lost just shy of $1 billion in the first six months of this year.

Competition is also ramping up. Currently, Clearwire is the only wireless network to offer 4G service, but that's soon to change with Verizon (VZ, Fortune 500) set to roll out its 4G network later this year and AT&T (T, Fortune 500) scheduled to unveil its 4G network in 2011. Verizon and AT&T are also placing their bets on a network standard called LTE, or Long Term Evolution, which experts say is able to offer faster speeds than WiMAX.

But Clearwire said that Rover can help give the company a leg up on the looming competition. Targeting 18- to 24-year-old Internet-addicted "Generation Y-ers," Clearwire is betting that younger people who are buying Internet services for the first time on their own will be attracted to the speed and availability of its network, plus the lack of a contract or fees.

"This segment lives a mobile life and has a desire for unlimited bandwidth, but they don't want contracts or hassles," said Mike Sievert, chief commercial officer for Clearwire, on a conference call with reporters.

The prepaid wireless segment, which represents 20% of the overall mobile market, has traditionally been made up of credit-challenged or low-income customers, though young people are becoming an increasingly large part of that market as well. Clearwire believes it can attract users from that market with its unique offerings, since low-cost wireless carriers tend to offer less powerful and uninteresting devices on slower 3G networks.

According to Dan Hays, a partner at business consultancy PRTM who focuses on the telecom field, Rover could significantly expand Clearwire's market and attract new customers.

"Pay-as-you-go could increase customers' willingness to try out Clearwire's 4G services and ultimately increase adoption and subscriber growth rates," Hays said.

That will help Clearwire stay relevant when it's no longer the only game in town, Hays noted. To top of page

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