McCaw Cellular Communications, Inc., was a

cellular telephone A mobile phone or cell phone is a portable telephone that allows users to make and receive calls over a radio frequency link while moving within a designated telephone service area, unlike fixed-location phones ( landline phones). This radio ...

pioneer in the

United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

. Savvy licensing of cellular spectrum in the early 1980s put McCaw Cellular in an extremely strong position, quickly outpacing the growth of the "Baby Bells" in the emerging market. The company purchased

MCI Communications MCI Communications Corporation (originally Microwave Communications, Inc.) was an American telecommunications company headquartered in Washington, D.C. that was at one point the second-largest long-distance provider in the United States. ...

's mobile businesses in 1986, followed by

LIN Broadcasting LIN Media was an American holding company founded in 1994 that operated 43 television stations. All except one were affiliates of the television in the United States#Major broadcast networks, six major U.S. television networks. One of the re ...

in 1989, giving them widespread access in all of the major US markets. Partnering with AT&T as a technology provider, McCaw introduced their "Cellular One" service in 1990, the first truly national cellular system.

AT&T AT&T Inc., an abbreviation for its predecessor's former name, the American Telephone and Telegraph Company, is an American multinational telecommunications holding company headquartered at Whitacre Tower in Downtown Dallas, Texas. It is the w ...

purchased 33% of the company in 1992, and arranged a merger in 1994 that made

Craig McCaw Craig McCaw (born August 11, 1949) is an American businessman and entrepreneur, a pioneer in the cellular phone industry. He is the founder of McCaw Cellular (now part of AT&T Mobility) and Clearwire Corporation (now part of T-Mobile via the Sp ...

one of AT&T's largest shareholders. In 2002, the company was spun off from AT&T to become AT&T Wireless Services.

History

McCaw Cellular Communications

In 1966 J. Elroy McCaw sold one of his

cable television Cable television is a system of delivering television programming to consumers via radio frequency (RF) signals transmitted through coaxial cables, or in more recent systems, light pulses through fibre-optic cables. This contrasts with bro ...

holdings in

Centralia, Washington Centralia () is a city in Lewis County, Washington, Lewis County, Washington (state), Washington, United States. It is located along Interstate 5 in Washington, Interstate 5 near the midpoint between Seattle and Portland, Oregon. The city had a ...

to his three sons, including Craig who was 16 years old at the time. Craig took an increasingly central role in the development of McCaw Communications, and by the early 1980s had grown the company from 2,000 subscribers to about $5 million in annual revenue.''AT&T Wireless'' In 1981 McCaw came across an AT&T document about the future of cellular telephony, which predicted that by the turn of the century there would be 900,000 cellular subscribers in the United States. Intrigued, McCaw found that the licenses for cellular spectrum were being sold at $4.50 per "pop", meaning he could build a base for future subscribers for very low cost. By 1983, McCaw Communications had purchased licenses in six of the 30 largest US markets. McCaw then succeeded in using the licenses and collateral, based on the AT&T projections, using that collateral to take out loans and buy more licenses, and eventually buying billions of dollars of spectrum. In 1987 he sold the cable business for $755 million, and used this new capital to buy even more cellular licenses. It was around this time that the first wave of analog cellular telephones were starting to enter the consumer conscience. The

Baby Bells A Regional Bell Operating Company (RBOC) was a corporate entity created as result of the antitrust lawsuit by the United States Department of Justice against the Western Electric Company and American Telephone and Telegraph Company (AT&T) in 194 ...

started the process of buying their own licenses, only to find that McCaw owned enough of most of the major markets to lock them out unless they purchased spare licenses from him, at a huge profit. His network of licenses in the major markets was used as a lever to buy, sell or trade licenses in other markets that were not considered profitable, at a considerable discount. In 1986 the company purchased MCI's wireless operations, cellular and paging, for $122 million, and changed their name to "McCaw Cellular Communications".Biography In 1989 the company outbid

BellSouth BellSouth, LLC (stylized as ''BELLSOUTH'' and formerly known as BellSouth Corporation) was an American telecommunications holding company based in Atlanta, Georgia. BellSouth was one of the seven original Regional Bell Operating Companies after ...

for control of

, which owned licenses in

Houston Houston ( ) is the List of cities in Texas by population, most populous city in the U.S. state of Texas and in the Southern United States. Located in Southeast Texas near Galveston Bay and the Gulf of Mexico, it is the county seat, seat of ...

Dallas Dallas () is a city in the U.S. state of Texas and the most populous city in the Dallas–Fort Worth metroplex, the List of Texas metropolitan areas, most populous metropolitan area in Texas and the Metropolitan statistical area, fourth-most ...

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, and

New York New York most commonly refers to: * New York (state), a state in the northeastern United States * New York City, the most populous city in the United States, located in the state of New York New York may also refer to: Places United Kingdom * ...

, paying $3.5 billion, a price that represented $350 per license.

Cellular One

At this point McCaw's focus turned from dealing licenses to servicing the network, signing up customers in what was now a maturing technology on the cusp of explosive growth. In order to handle the customer side of the business, McCaw turned to AT&T for technology. In 1990, McCaw Cellular introduced SS7 signaling across their network. Prior to this, each cell tower in the network connected to local signaling, billing and sets of land-lines. Since only the towers in the area local to the customer's home had access to dialing and routing information, when they traveled to another area calls could not reach them. With the introduction of SS7 signaling, the dialing and routing information could now be switched across the entire network (known technically as Non-Facility Associated Signalling), tying it together into a single national network. They called the new system "Cellular One", and introduced the concept of roaming charges. That year, McCaw earned $54 million, making him America's highest-paid chief executive. The partnership grew in November 1992, when AT&T purchased 1/3 of the company for $3.8 billion. At the time, the company was generating $1.75 billion in annual revenue, and had two million Cellular One subscribers - far more customers than AT&T's earlier projections for all cellular use in the US, at a point almost ten years earlier.

AT&T Wireless

In 1994 the marriage of the two companies was consummated when AT&T purchased the rest of McCaw Cellular for $11.5 billion, at that time the second largest merger in US history, second only to the

RJR Nabisco R. J. Reynolds Nabisco, Inc., doing business as RJR Nabisco, was an American conglomerate, selling tobacco and food products, headquartered in the Calyon Building in Midtown Manhattan, New York City. R. J. Reynolds Nabisco stopped ...

takeover documented in '' Barbarians at the Gate''. The merger was completed in late 1994, creating AT&T Wireless Group, which was at that time the largest cellular carrier in the US. As a result of the merger, Craig McCaw became one of AT&T's largest shareholders, but he refused to sit on the Board of Directors because he couldn't stand long meetings. McCaw left daily operations to focus on

Teledesic Teledesic was a company founded in the 1990s to build a commercial broadband satellite internet constellation. Using low-Earth-orbiting satellites small antennas could be used to provide uplinks of as much as 100 Mbit/s and downlinks of up t ...

, passing control of AT&T Wireless to James Barksdale, and then Steve Hooper when Barksdale left for

Netscape Netscape Communications Corporation (originally Mosaic Communications Corporation) was an American independent computer services company with headquarters in Mountain View, California, and then Dulles, Virginia. Its Netscape web browser was o ...

References

Notes

Bibliography

"AT&T Wireless Services"
FundingUniverse
"Craig McCaw Biography, Pioneer of Telecommunications"
Academy of Achievement

External links

{{Finance links historical , name = McCaw Cellular Communications Inc. , sec_cik = 0000818687 Telecommunications companies established in 1986 American companies established in 1986 Defunct mobile phone companies of the United States Defunct companies based in Redmond, Washington 1994 mergers and acquisitions American companies disestablished in 1994 Telecommunications companies disestablished in 1994 1986 establishments in Washington (state) 1994 disestablishments in Washington (state)