Cable's 4G play: Will Clearwire stay in the picture?

When Sprint (NYSE: S) and leading cable operators Comcast (Nasdaq: CMCSA), Time Warner Cable (NYSE: TWC-WI) and Bright House Networks--along with Intel (Nasdaq: INTC) and Google (Nasdaq: GOOG)--formed Clearwire (Nasdaq: CLWR) in 2008 it was assumed that the 4G WiMAX service provider would be cable's mobile wireless play.

So far, things haven't worked out exactly as planned.

At first, all parties involved continued to boost WiMAX as the best 4G option even as LTE (long term evolution) took hold among telcos as the major 4G transitional method.

Then things seemingly went a little sour. The partnership remained intact but any expansion--especially financially--became unlikely. Over the past several months, as Clearwire has struggled financially as well as with its major partner, Sprint, it's become less clear that cable is in the WiMAX-based mobile wireless play for the long haul.

The most recent Clearwire news suggests that there's less interest in an auction of excess wireless spectrum than was originally thought has even further clouded an already stormy financial picture.

Spectrum moves

According to what multiple sources have told Reuters, Clearwire appears to be working well with T-Mobile on the spectrum purchase (since T-Mobile really needs something to goose a 4G play). Additionally, the carrier has managed to raise about $1.3 billion in funding to continue paying for operations and an ongoing network buildout. About the most positive of the recent reports are that Ben Wolff, who stepped in to take over after founder/chairman Craig McCaw left late last month, "works well with Sprint (and) there's a decent chance they can have meaningful discussions."

Clearwire twice declined to offer an executive to talk about its cable partnerships, but a Clearwire spokesman noted that the company "can't speak for the cable providers" although those partners "continue to offer 4G products via Clearwire's network in multiple networks."

Of course, offering products versus offering support to a financially troubled company are two different things. When it comes to money, cable seems to have sewn shut its pockets.

"We're continuing to monitor the wireless business but I think we're very pleased with where the overall data business is and that's really how we look at wireless," Comcast Chairman-CEO Brian Roberts said during his company's third quarter earnings call.

Rather than talking about a mobile wireless play outside the home, Roberts said the "most intriguing" part of Comcast's wireless play was the "last foot" where the company's WiFi network connects to wireless devices such as the iPad.

Leaning toward WiFi

A couple weeks ago, speaking at Citigroup's 21^st Annual Global Entertainment, Media and Telecommunications Conference, Roberts reinforced his vision of WiFi-leaning Comcast within the wireless home.

"We're pretty excited that this new tablet world," Roberts said, pointing to a wireless vision that includes "all the mobile devices, phones, Android devices (and) not just Apple devices" that are "really friendly for a wireless WiFi connected to broadband in your home and a mobile device out of your home."

Again, not a Clearwire-fueled mobile device.

Time Warner Cable Chairman Glenn Britt echoed Roberts during his company's third quarter earnings call when he said TWC's wireless business is "still very much early stages. We're learning about the business, how to sell the products."

Perhaps the most damning comments came from Ted Schremp, executive vice president and chief marketing officer of Charter Communications, at the Citigroup conference.

"We made a decision not to join (Clearwire predecessor Pivot, a joint venture with Sprint) a number of years back; made a decision not to enter into a Clearwire investment and, frankly, had some pretty robust conversations about how we might enter that space," Schremp said. "We frankly haven't figured out a way from a Charter perspective of how to go become a retail participant in wireless."

The two faces of Clearwire

Combined with the lack of movement on the part of those who have decided to go with Clearwire, Charter's hesitation suggests the 4G provider could be left dangling in the wind. Clearwire's spokesman did his best to put a rosy tint on things by emphasizing the company's split persona of fixed broadband wireless provider for its Clear brand and wholesaler to the cable industry.

"We have always said in the past that the more doors open is good for our business in that it allows us to load the network faster and that's what we're seeing as we grow subscribers to our service. Reaching different segments with the varying appeal of diverse brands has been great for growing the subscriber base and bundling the business in multiple demographics," the spokesman told FierceCable.

It seems very apparent that there are two Clearwires: the company pushing its own mobile broadband agenda and the company that's the tenuous mobile arm of three major cable providers and the 4G extension of a telco.

"Cable realizes, at some level, that mobile is in its future," said Peter Jarich, principal analyst, wireless for Current Analysis who pointed to Comcast's High-Speed 2Go initiative, Cox's non-Clearwire LTE trials and the often behind-the scenes strand-mounted picocell work operators are doing with BelAir Networks.

While Jarich conceded that cable will probably end up reselling someone else's wireless service, as it already does with Sprint and Clearwire, this is not an industry that historically uses what others have; it's an industry that owns and operates and right now any expansion by cable of its stake in Clearwire is not happening.

"There has to be an understanding that owning the network gives so much more control," Jarich said, hinting that cable could go in another direction based on the "tenuous nature of Clearwire" but that whatever direction the industry follows "control needs to look better all the time."