Subject: [NEXTEL-1] Craig (Nextel) McCaw has purchased NextNet Wireless Inc

From: [email-masked]
Date: Tue, 27 Apr 2004 20:31:49 -0400

EXCLUSIVE REPORTS
From the April 23, 2004 print edition

NextNet bought by cell-phone tycoon

Mark Reilly
Senior reporter

Telecom billionaire Craig McCaw has purchased NextNet Wireless Inc. to
help him assemble a powerful, national player in the growing
fixed-wireless market.

Bloomington-based NextNet, which makes a system to deliver high-speed
Internet access through radio waves,
merged last month with a McCaw-backed organization in Kirkland, Wash.,
called Clearwire, according to
sources familiar with the deal.

The acquisition was disclosed in securities filings made by Zamba Corp.
and Entrx Corp., two publicly-traded Minneapolis companies that owned
shares of NextNet.

Those filings did not identify the purchaser of NextNet, but Ron
Eibensteiner, president of Minneapolis-based Wyncrest Capital Inc. and a

NextNet investor, confirmed that the buyer was McCaw. A New
York-based analyst also confirmed the news. McCaw last year bought an
undisclosed stake in NextNet.

A spokeswoman for NextNet had no comment. "There's been a lot of
speculation out there, but we're not making any public statements," said

Barbara Heine.

Terms of the deal were not disclosed, though sales of NextNet stock by
Zamba in 2002 indicate that the total company would have been worth
about $80 million at that point. However, Entrx lowered the value of its

NextNet assets (now in the form of warrants in the merged company)
after the deal.

A major telecom player

Regardless, the attention of McCaw -- whose wealth is estimated by
Forbes magazine at $2.8 billion -- is a potentially huge boost for
NextNet,
whose systems have been deployed so far in out-of-the-way or
international markets, but have gained momentum recently.

McCaw built the largest cellular company in the nation, selling it to
AT&T
for nearly $12 billion. He also was a major investor in Reston,
Va.-based
wireless company Nextel Communications Inc. and a director there until
December, when he resigned to concentrate more on wireless startups,
according to The Washington Post.

"It's a tremendous validation for the company," said Eibensteiner, an
investor in NextNet since the late 1990s.

After McCaw's initial investment, he had nearly a year to study NextNet
from the inside before buying it, Eibensteiner said. "He didn't do this
accidentally."

Though he hasn't spoken with McCaw directly, Eibensteiner said the new
owner has big plans for the company. "He thinks this can be another
Nextel."

A long time coming

Such words must lift the spirits of many longtime backers of NextNet,
the
progeny of the defunct Racotek Corp. That Bloomington-based company,
which raised roughly $70 million to develop a wireless-data system for
truckers and delivery fleets, sank in 1999 when it was unable to attract

enough customers. It reinvented itself as the consulting firm Zamba and
spun out some of the technology to NextNet.

In the years after, NextNet continued to hone its core product, called
Expedience. The system uses a textbook-sized transmitter that can
deliver
broadband access to a PC via links to wireless towers, akin to a
cellular
phone system. Unlike a cell phone, the device isn't mobile, hence the
name
"fixed wireless."

Telecom firms have toyed with wireless broadband for years as an
alternative to high-speed service over cable or digital phone lines. A
key
advantage is the cost: Rather than laying cable to every subscriber,
providers can just build a few towers to cover large areas.

But for a number of reasons, the technology hasn't taken off. There were
early technical problems
when trees or buildings blocked the towers from the PC's antennas. The
telecom bustm discouraged new
investment of any kind, and WorldCom's bankruptcy also hurt since it
was one of the largest proponents of fixed wireless, holding licenses
for
large portions of airwave spectrum.

But NextNet has made progess. It has drawn funding from investors such
as GlobeSpan Capital of Boston and Doll Capital Management of Menlo
Park, Calif.

Among the company's biggest assets is its technology, which doesn't
require clear line-of-sight to work. It has rolled out systems in
several
Mexican cities in partnership with cable provider MVS Comunicaciones
and has inked a similar deal with Brazil telecom providers to launch
service
there.

This year, NextNet's systems were used in big wireless deployments in
two tech-savvy cities near Vancouver and Ottawa, Canada. The
company's partners in that venture include Microcell Telecommunications
Inc. of Montreal, Allstream Inc. of Canada, and NR Communications, a
Seattle-based telecom investment firm headed by Nick Kauser, a director
in NextNet and an associate of Craig McCaw.

McCaw recently invested in Microcell, ending up with up to a 17 percent
stake in that company, according to The Toronto Star.

That group of companies plans to offer wholesale service to Canadian
telecom providers, with NextNet providing the hardware, Microcell the
spectrum and Allstream the wireline connections to link wireless users
to
the main telecom network. Brian Sharwood, analyst with the Seaboard
Group in Toronto, said providers are getting on board.

"There's been a lot of interest in it," he said, adding that McCaw and
Kauser provide credibility. NextNet's systems also are being tested by
AOL Canada in Toronto.

NextNet's future?

The Canadian model could offer clues to McCaw's plans.

Eibensteiner said McCaw would move NextNet into a new company,
called ClearWire Corp., along with another company that owns large
amounts of U.S. spectrum.

As it happens, McCawrecently purchased such a company, the Arlington,
Texas-basedClearwire Holdings. The Dallas Business Journal, a sister
publication to The Business Journal,
reported last week that Clearwire Holdings had been absorbed into
Clearwire Corp. of Kirkland, Wash. The paper cited securities documents
listing McCaw as executive officer at Clearwire Corp.

Clearwire Holdings sold high-speed wireless service in a handful of
markets and in 2001 acquired the rights to radio spectrum in about 100
markets across the country.

Ed Rerisi, vice president of research with ABI Research in Oyster Bay,
N.Y., said that it made sense to pair NextNet and Clearwire.

"The problem in this industry has always been getting all the pieces of
the
puzzle together," Rerisi said. "It looks like that's what [McCaw is]
doing."

Rerisi knew of the Clearwire and NextNet acquisitions, but noted that
few
details are available.

That secrecy isn't surprising, he said. McCaw was likely trying to move
as stealthily as possible for now to guard against competitors bidding
up
the prices of other potential targets.

Though NextNet's new home may be the Seattle area, Eibensteiner said he
expects the engineering operations of Clearwire Corp. to remain in
Minnesota. "This is where the technology came from," he said.

It's also unclear whether Clearwire will be the final name of whatever
business McCaw is planning. The Dallas Business Journal also noted that
another ingredient of Clearwire was an unknown entity called Flux Fixed
Wireless.

Flux Fixed Wireless does have an active Web site. Not surprisingly, it
says
the company is in "stealth mode."

http://twincities.bizjournals.com/twincities/stories/2004/04/26/story1.html

--
    "NEXTEL-1 IT'S NOT JUST NEXTEL"
  Note The New address
Subscribe to Nextel-1: http://www.groups.yahoo.com/subscribe/NEXTEL-1

  "NEXTEL2 FOR iDEN SOFTWARE DEVELOPERS"
Subscribe to Nextel2: http://www.groups.yahoo.com/subscribe/NEXTEL2

  "WIRELESS FORUM HOMELAND SECURITY GROUP"
     The Complete Resource for Wireless Homeland Security.
Subscribe to WFHSG:  http://www.groups.yahoo.com/subscribe/WFHSG

------------------------ Yahoo! Groups Sponsor ---------------------~-->
Buy Ink Cartridges or Refill Kits for your HP, Epson, Canon or Lexmark
Printer at MyInks.com.  Free s/h on orders $50 or more to the US & Canada.
http://www.c1tracking.com/l.asp?cid=5511
http://us.click.yahoo.com/mOAaAA/3exGAA/qnsNAA/61FxlB/TM
---------------------------------------------------------------------~->

-- 
    "NEXTEL-1 IT'S NOT JUST NEXTEL"
  Note The New address 
Subscribe to Nextel-1: http://www.groups.yahoo.com/subscribe/NEXTEL-1

  "NEXTEL2 FOR iDEN SOFTWARE DEVELOPERS"
Subscribe to Nextel2: http://www.groups.yahoo.com/subscribe/NEXTEL2

  "WIRELESS FORUM HOMELAND SECURITY GROUP"
     The Complete Resource for Wireless Homeland Security.
Subscribe to WFHSG:  http://www.groups.yahoo.com/subscribe/WFHSG

Yahoo! Groups Links

<*> To visit your group on the web, go to:
     http://groups.yahoo.com/group/NEXTEL-1/

<*> To unsubscribe from this group, send an email to:
     [email-masked]

<*> Your use of Yahoo! Groups is subject to:
     http://docs.yahoo.com/info/terms/