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Friday, April 30, 2004 - Page updated at 01:23 A.M.
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Northwest stock contest 2004 | Consumer affairs

McCaw building another venture

By Tricia Duryee
Times Eastside business reporter

Craig McCaw
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Craig McCaw has formed a new company that could be the launching pad for his next business venture.

McCaw, the wireless mogul who started what is now AT&T Wireless, last month merged his Kirkland-based Flux Fixed Wireless company with Clearwire Holdings, based in Arlington, Texas.

Clearwire provides high-speed wireless Internet service and holds leases to broadcast spectrum allotted to schools in the 1960s for television programming.

McCaw is listed in regulatory filings as owning at least 10 percent of the new company, known as Clearwire Corp. He is an executive officer and director, and Clearwire's senior management and shareholder lists are stacked with former McCaw Cellular and AT&T executives.

It's unclear how much investment the Clearwire acquisition represents; terms of the merger weren't disclosed. But some observers see similarities to McCaw's past ventures, giving the impression it could be the cellular pioneer's next big thing.

"This is the kind of thing that, if he was going to put his own time into, this is probably it," said Steve Wood, chief executive of Bellevue-based Wireless Services. "It certainly fits with his background."

McCaw is best known for starting McCaw Cellular Communications, which he sold to AT&T for $11.5 billion in 1994. He later rescued Reston, Va.-based Nextel Communications in 1995 by investing about $1.1 billion to make it one of the country's largest carriers.

The Clearwire position could be the first leadership role the reclusive businessman has taken since resigning from Nextel Communication's board late last year to start investing and working with young companies.

He is known to have invested in Bellevue-based RadioFrame, which develops technology designed to improve indoor wireless phone and Internet access for companies, and in NextNet Wireless of Minneapolis.

The merged company will be based in Kirkland.

As part of the merger, the broadcast-spectrum leases were assigned to the new entity, according to Todd Wolfenbarger, a spokesman for Eagle River, McCaw's investment arm. Wolfenbarger would not say specifically what the licenses would be used for.
 
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"Craig's been very active in wireless investments for a long time. ... Clearwire is another one of these that's he's made. He continues to believe there's an opportunity in the space," Wolfenbarger said.

The Clearwire transaction was completed March 30, according to a document filed with the Securities & Exchange Commission.

In addition to McCaw, other former McCaw or AT&T employees of his were listed as having a 10 percent stake, and either a leadership or director role. They include: Gerard Salemme, the company's president; Nick Kauser; James Mansour; and Rob Mechaley. Mechaley is founder and chairman of RadioFrame.

Clearwire, which raised more than $100 million in venture capital since its 1998 start, focused on leasing spectrum called Instructional Television Fixed Service (ITFS), used by schools to broadcast television programming.

Commercial companies and educational entities have both long supported using the spectrum for more than education, said Patrick Gossman, director of academic technologies and customer services at Wayne State University in Detroit.

Gossman, chairman of the National ITFS Association, said the Federal Communications Commission recently made the rules more flexible on how the spectrum can be used.

License holders are awaiting direction on how the rules will be implemented, Gossman said. The FCC could decide this summer, he said.

ITFS spectrum has the advantage of being used by one entity at one time. By contrast, wireless spectrum, or WiFi, can experience interference.

Wood, who was part of McCaw Cellular's executive team, said he has been aware of McCaw, Mechaley and Kauser acquiring spectrum for more than a year.

He figures they are interested in buying spectrum, as McCaw did to create his national cell carrier and then later with Nextel Communications.

"He's done it several times," Wood said. "This is his new gobble-up-the-wireless-spectrum venture."

Tricia Duryee: 206-464-3283 or tduryee@seattletimes.com

Copyright © 2004 The Seattle Times Company

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