Clearwire 2007 Annual Report Download - page 13

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attractive price. While we serve a large variety of subscribers, we believe that the majority of our subscriber base can
be divided into the following broad categories:
• subscribers who require a portable or mobile high-speed Internet connection, such as on-the-go profes-
sionals, field salespeople, contractors, police and fire personnel and others;
• subscribers who value the flexibility of a portable or mobile wireless broadband service;
• subscribers who desire a simple way to obtain and use high-speed Internet access at a reasonable price; and
• subscribers who are dissatisfied with other service offerings, often because of perceived or actual poor
quality of service, slow speeds, price, the requirement to participate in undesired bundled offers, difficulty of
installation or unsatisfactory customer service.
Based on a subscriber survey we conducted in the fourth quarter of 2007, approximately 66% of our new
domestic subscribers in that quarter reported they were subscribers of either DSL or cable modem service at the time
that they subscribed for our services, while approximately 25% of our new domestic subscribers in that month were
Internet users migrating from dial up to broadband and a small minority of our new domestic subscribers were
subscribers of other services or they were first time Internet subscribers. As of December 31, 2007, approximately
62% of our U.S. subscribers had selected one of our premium offerings, such as ClearPremium or ClearPremium
Plus.
New subscribers to our ClearValue, ClearPremium, ClearPremium Plus and ClearBusiness service plans
generally sign a service contract with a one or two year term. We typically charge an activation fee of $50, which is
usually waived for subscribers signing a two-year contract. Other variations on rate plans, promotions, terms and
fees may be offered through certain of our distribution partners.
We recently began to offer alternative payment plans to address the specific needs of some of our subscribers.
For example, in 2007 we introduced a month-to-month no contract option for our ClearPremium service, which is
well-suited for subscribers who either do not meet our credit requirements or who anticipate needing our service for
a limited period of time, such as military personnel or students. These subscribers are not required to sign a contract,
but they are charged a higher monthly fee than the price paid by subscribers who enter into a contract. Additionally,
in lieu of signing a contract, our subscribers have the option of receiving the lower contract rate by prepaying an
amount equal to the fees for 12 months of our services.
Our subscribers generally make their payments through an automatic charge to a credit or debit card. We
believe automatic billing reduces our transaction costs, permits us to bill in advance, which serves to reduce our bad
debt and accounts receivable expenses, and improves subscriber retention and renewal rates. We generally have not
accepted other forms of payment. We expect to begin accepting cash payments at Clearwire retail outlets in 2008 as
we anticipate implementing a point of sale system in late 2008, for those subscribers who like the convenience of
cash.
To use our current services, our subscribers must obtain one of our modems or PC cards. Our subscribers
generally lease a modem from us at a rate of $4.99 per month or a PC card at $6.99 per month. We also offer modems
and PC cards for sale to those subscribers who prefer to own rather than lease. We require subscribers under our no
contract payment plan to purchase a modem or PC card in order to subscribe for our broadband services.
International Wireless Broadband Services
We expect to continue to leverage the product development initiatives of our domestic operations in
establishing our service offerings in our international markets. We currently offer wireless broadband services
similar to our domestic service through our subsidiaries in Belgium, Ireland and Spain. Our equity investees offer a
comparable wireless broadband service in their markets in Denmark and Mexico.
In our international markets, we currently offer subscribers a choice of service plans designed to accommodate
users that require faster access speeds or a greater number of email addresses and web hosting accounts. The
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