Subject: [NEXTEL-1] The Craig McCaw Cellular Mafia Morns The Sale of AT&T

From: Marcelrf <[email-masked]>
Date: Wed, 18 Feb 2004 21:49:50 -0500

The Craig McCaw Cellular Mafia Morns The Sale of AT&T
Sale of AT&T Wireless Disheartens Seattle Cellular Pioneers Who
Founded Firm
Source: The Seattle Times
Publication date: 2004-02-18

Feb. 18--In this city that gave birth to the U.S. wireless industry,
many
members of the McCaw Cellular mafia mourned as AT&T Wireless was
being sold yesterday. For them, it was like watching the fall of Rome.

What was once a pioneering company that defied expectations had been
reduced to an ailing giant in search of a caretaker, they said. They
lamented a past in which AT&T Wireless, formerly McCaw Cellular
Communications, would have done the shopping, not the other way
around.

While it's not the first time McCaw Cellular has exited the stage, many
believe it will be the last.

"You put all this emotion, time, effort, energy into an endeavor and
build
what was arguably the No. 1 cellular company that wound up merging with
a very strong brand name, AT&T. It doesn't get much bigger than that,"
said John Chapple, chief executive of Nextel Partners and a former McCaw

Cellular executive. "And then a mere couple of years later, it's on its
way
to extinction."

Some of that is nostalgia, he says. He's now peering in from the
outside,
along with many of the ex-mafioso.

But he also sees more AT&T Wireless customers switching to Nextel
Partners than vice versa. The high number of customers leaving in recent

months was shocking to him and other McCaw alum.

Others point to customer-satisfaction numbers, a leading indicator of
the
company's future financial success. In February, Consumer Reports put
AT&T Wireless in the middle and bottom of the pack in its markets. Four
years ago, the company was leading in customer satisfaction.

Then there's the company's financial performance. Compared with its
competitors, AT&T Wireless generated less cash from each dollar it
brought in during the fourth quarter of 2003.

The McCaw veterans shook their heads when AT&T Wireless experienced
a multitude of software glitches transferring customer phone numbers,
bringing down the hand of the Federal Communications Commission.

It's enough for the alumni to launch into the opening strains of "The
Way
We Were."

Back in the 1980s, McCaw Cellular was a band of cowboys in Kirkland led
by Craig McCaw, who built a viable service out of an untested
technology,
even when naysayers predicted cellphone technology would never be
cheap enough to sell to the masses.

A team of lieutenants scoured the country buying airwave licenses and
cobbled together the first nationwide network.

In 1994, McCaw sold the company to AT&T in a merger that many thought
would take it to the next level by combining Ma Bell's brand with a
national
wireless network.

Most members of the original McCaw team made their fortunes in the
merger and went on to pursue new ventures: VoiceStream Wireless (now
T-Mobile USA), Nextel Communications, Nextel Partners, Western
Wireless and several Seattle venture-capital firms.

For a while, it looked like AT&T was still willing to give McCaw
Cellular free
rein. The post-merger head, Steve Hooper, had risen through McCaw's
ranks.

To a company like AT&T, the wireless business probably looked chaotic.
Inside, AT&T Wireless felt like an egalitarian society, with little
hierarchy
to stifle innovation. The company's mission put employee satisfaction
above customer satisfaction.

Ma Bell sent Dan Hesse to take over in 1997, but instead of delivering
AT&T's 10 commandments, he adopted McCaw Cellular's religion. The
business was still thriving; AT&T Wireless became recognized as a
technology leader among its peers.

The turning point, observers say, came when John Zeglis, AT&T's general
counsel, replaced Hesse as AT&T was preparing to spin off the wireless
business as a tracking stock in 2000. He promised employees he would
move to Seattle but never did.

Instead, he built a new office in New Jersey and ran the company 3,000
miles from its corporate headquarters.

He replaced executives with AT&T corporate faces. The organization
became a molasses-thick bureaucracy. Managers abandoned the
company in noticeable numbers.

Its momentum slowed to a plod that came to a halt in December when the
stock fell to about $7. Nextel Communications, a company with about half

as many subscribers, was valued at $9 billion more than AT&T Wireless.

"Its performance has lagged behind its direct wireless competitors,"
said
Donald Guthrie, a former McCaw Cellular executive who is now vice
chairman of Western Wireless.

Some say Cingular's staggering $41 billion offer is just more evidence
of
how far AT&T Wireless has fallen below its potential.

"Some of the old warriors would have liked to have seen a different
outcome," said Chapple.

It's a bitter pill to swallow for the old-timers, most of whom are
turning 50.

A surprise party for Hooper's 50th birthday last year became a McCaw
reunion. Some 300 wireless-industry luminaries showed up in Bellevue to
roast Hooper and went on to wax poetic about McCaw Cellular and the
good ol' days.

"It was a lovefest, not just for Steve but for this great company and
this
great culture," said Dan Hesse.

Chapple still runs into ex-McCaw folk about town. More often than not,
they'll ask him, "What happened to our baby?"

-----

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