"Clearwire's First Service Launch in 1999
Starting out, Clearwire offered its service to the two areas that represented the company's geographic background. In March 1999, it launched its first wireless service in Dallas using the unlicensed 2.4-gigahertz (GHz) bandwidth of the radio spectrum.
In August 1999, the company offered its small-business oriented service to customers in Buffalo, using a base station in the city's downtown area that was capable of serving customers within 25 miles of the transmitter.
After releasing its first two systems, Clearwire adopted an expansion strategy more attuned to the advantages offered by wireless service.
Large metropolitan areas such as Dallas were not the ideal locations for Clearwire service. Instead, the company targeted smaller cities, choosing to deploy its service in what were referred to as second- and third-tier cities. In many of these areas, the infrastructure to provide broadband service had not been built; trenches to lay cable needed to be dug, high-speed phone lines needed to be installed.
Clearwire moved into these areas, establishing service in cities such as Albuquerque, New Mexico, and Columbus, Ohio.
As Clearwire began expanding into other markets, the company financed its growth through private investments. The first infusion of capital occurred at the end of 2000, when Dallas-based Cardinal Investments Inc. provided $22 million to help fund the establishment of Clearwire systems in new markets.
A second round of financing occurred in April 2001, when an effort led by Goldman, Sachs & Co. and Liberty Associated Partners L.P. realized a capital injection of $97 million. The funds were earmarked for the development of new transmission equipment that was expected to double Clearwire's existing speed of service.
At roughly the same time Clearwire secured its $97 million in financing, the company brokered an important agreement, one that held particular importance for McCaw's version of Clearwire. During its first years in business, Clearwire operated in the unlicensed 2.4-GHz frequency, which was subject to interference and forced the company to compete with such powerhouses as Sprint and WorldCom for bandwidth. In early 2001, the company signed an agreement to share radio frequencies with the Instructional Television Fixed Service Spectrum Development Alliance (ITFS), a group of instructional television providers allotted bandwidth by the Federal Communications Commission in the 1960s. The agreement allowed Clearwire to lease wireless spectrum in the 2.5- to 2.7-GHz spectrum, giving it access to the frequency rights held by ITFS in roughly 100 cities.
With a fresh infusion of cash and the ability to obtain licenses in scores of markets, Clearwire plotted an ambitious program. The company planned to launch its service in 80 markets, expecting to begin its rollout in 2002, but before the expansion program was implemented, Clearwire stumbled.
In October 2001, just six months after receiving $97 million, the company shut down service in three of its four markets, maintaining its service in Albuquerque. The company laid off 55 of its employees, a cutback that represented 55 percent of its workforce.
Only a cursory explanation was given by Clearwire for its sudden retreat, an episode in the company's development that marked the beginning of the end for the Arlington-based Clearwire Technologies and its later emergence as the McCaw-led, Kirkland, Washington-based Clearwire, Inc. "We felt it was the smart thing to do due to the relative short-term uncertainty in the economy and the telecommunications markets," a Clearwire official said in an October 2001 interview with Dallas Business Journal."
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