Subject: [NEXTEL-1] 'What happened to our baby?' McCaw alum ask

From: Marcelrf <[email-masked]>
Date: Sun, 22 Feb 2004 23:23:40 -0500

Seattle Times, WA - Feb 18, 2004

'What happened to our baby?' McCaw alum ask
By Sharon Pian Chan

Seattle Times staff reporter
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.

Leader no more

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.

Long-distance management

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?"
Sharon Pian Chan: 206-464-2958 or [email-masked]

 http://seattletimes.nwsource.com/html/businesstechnology/2001859809_attwslegacy18.html

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