Wednesday, November 14, 2007

McCaw Bets Again On Wireless Frontier

November 14, 2007, WSJ

Craig McCaw got rich betting on cellphones when they were still brick-size gadgets with just 30 minutes of battery life. These days, he's rolling the dice on another untested concept: a nationwide high-speed wireless network based on WiMax technology.

His company, Clearwire Corp., is trying to cobble together a network to give customers fast, affordable Internet access for laptops and mobile devices in their homes, cars, commuter trains -- almost anywhere. "Nobody has fulfilled the dream of what mobile broadband could be," says Mr. McCaw, 58 years old, who has been working at it for more than a decade.

It's proving a formidable challenge. WiMax -- a longer-range cousin of the Wi-Fi technology that creates Internet hot spots in homes and coffee shops -- is unproven for large-scale use. Clearwire needs to buy up radio spectrum and erect towers all over the country, which will likely cost billions of dollars. Right now, what Mr. McCaw needs most is a deep-pocketed corporate partner.

Last week, his plans on that front were dealt a blow. Sprint Nextel Corp., which is working on its own WiMax network, scrapped a preliminary agreement to join forces with Clearwire to build a national one. A separate plan to spin off Sprint's broadband unit and merge it with Clearwire was rejected by Sprint's board last week, people familiar with the situation say. The two companies are continuing to talk, these people say.

Mr. McCaw might have other options. Computer-chip maker Intel Corp., cable operator Comcast Corp., Google Inc. and at least one satellite-TV company had all been considering investing in a Sprint-Clearwire joint venture, people close to the matter say. Clearwire has been holding discussions with some of those parties about a direct partnership, these people say.

Key Dates: Craig McCaw's career
  • Mr. McCaw has ties to most of today's major wireless carriers through his own investments or colleagues from his early McCaw Cellular venture.
  • AT&T Inc.: In 1994, Craig McCaw sold his early cellphone venture, McCaw Cellular, to AT&T Corp. for $11.5 billion. AT&T's wireless assets were subsequently acquired by Cingular Wireless and are now part of the behemoth carrier AT&T Inc.
  • T-Mobile USA: One of McCaw's key lieutenants on McCaw Cellular was John W. Stanton. He went on to found another cellphone company called Western Wireless, which then spun off a venture called VoiceStream Wireless in 1998. Germany's Deutsche Telekom AG purchased VoiceStream in 2000 and renamed it T-Mobile USA.
  • Alltel Corp.: Mr. Stanton's Western Wireless was ultimately purchased by Alltel Corp. for $6 billion in 2005. Alltel, the nation's fifth-largest wireless carrier, is being taken private by TPG Capital and Goldman Sachs for $24.7 billion.
Sprint Nextel Corp.: McCaw invested in Nextel in the mid-1990s and brought in a new management team into the company. Nextel was purchased by Sprint for $35 billion in 2005, resulting in Sprint Nextel, the nation's third-largest carrier.

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