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If you like Craig McCaw's story, you might also like:
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Jeff Bezos,
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Craig McCaw's recommended reading: Oliver Twist

Craig McCaw also appears in the videos:
Education in the 21st Century

Making a Better World: What is Your Responsibility to the Community?

Entrepreneurs and the Information Age

Teachers can find prepared lesson plans featuring Craig McCaw in the Achievement Curriculum section:
The Information Age

Related Links:
Forbes
Clearwire

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Craig McCaw
 
Craig McCaw
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Craig McCaw Biography

Pioneer of Telecommunications

Craig McCaw Date of birth: August 11, 1949

Print Craig McCaw Biography Print Biography

 
  Craig McCaw

Craig McCaw Biography Photo
Craig O. McCaw was born in Centralia, Washington, the second of four sons of Marion and John Elroy McCaw. Over the course of his career, Craig's father would buy and sell dozens of radio and television stations. He often incurred large debts in the process, but the family lived well.

As teenagers, all four boys worked for one of their father's small cable television services: climbing poles, stringing cable, and selling subscriptions door-to-door. Their father sold the boys one tiny, 2,000-subscriber system in exchange for shares of preferred stock in the family company. Craig soon took the lead in managing the company. Although Craig was dyslexic, he made an extra effort in school both at his prep school in Seattle and at Stanford University, where he studied history. While at Stanford, he continued to run the cable company from his dormitory room.

Craig McCaw Biography Photo
When Craig was still a sophomore in college, his father died, leaving a heavy burden of debt and taxes. Over the next few years, Craig's accountant mother was forced to liquidate all of Mr. McCaw's holdings except for one cable service in Centralia, Washington which had been left to the boys in trust. After graduating from Stanford, Craig borrowed money against the Centralia system to buy other small cable operations in remote areas. He improved programming, raised rates, and cut costs. In the next few years, Craig's strategy for the cable TV operation paid off: while revenues quadrupled, the cash flow from operations grew eight-fold.

In 1981, McCaw began to research the cellular telephone market. Even according to AT&T's modest projections, the local permits sold by the FCC were greatly undervalued. Craig started bidding on cellular phone licenses. He planned a major expansion, but to do this, he needed more capital than McCaw Communications could ever earn from its modest cable television business.

Throughout the 1980s, McCaw sold shares in his company to larger enterprises: Affiliated Publications, E.W. Scripps Co., and finally British Telecom. In each case, the McCaw brothers kept control of the company in their own hands and in some instances bought back the shares, as their own operation grew to dwarf some of its former partners. At the same time, the backing of these established firms enabled McCaw to acquire a credit line of over a billion dollars.

The local phone companies, or "Baby Bells," created when a federal court order broke up AT&T's monopoly on phone service, had expected to dominate the infant cell phone industry. They were shocked to find that an unknown cable television operator from the Northwest had already acquired the licenses they needed in strategically chosen markets. McCaw borrowed massively to buy more and more licenses. He sold at a profit the licenses he couldn't use, and rolled the money back into purchasing more, gradually putting together the pieces of a national network.

Craig McCaw Biography Photo
In 1986, MCI Communications sold its cellular and paging operations to McCaw for $122 million and McCaw Cellular emerged as the industry leader. The McCaw brothers sold their cable television business outright for $755 million, to concentrate solely on building a national cellular phone network. They took the company public, putting 11 percent of the company in public hands while the brothers retained roughly 40 percent. In 1989, McCaw outbid Bell South for control of LIN Broadcasting. It cost $3.5 billion, but McCaw had acquired licenses in the very markets he needed to consolidate his system. It would now be impossible for a serious competitor to enter the field.

Wall Street looked with horror at the company's gargantuan debt, but McCaw knew he could resell individual cellular licenses at a profit to any of the regional Baby Bells. Meanwhile, revenues doubled, operating cash flow rose, and the number of subscribers exploded. McCaw himself earned $54 million in 1990, making him America's highest-paid chief executive. Less than one percent of this was paid in salary, the rest represented the increased value of his stock in the company.

In 1994, the McCaw brothers sold their company to AT&T for $11.5 billion. In the process, Craig McCaw himself became one of AT&T's largest shareholders, but he refused to sit on the Board of Directors, allegedly because he dislikes long meetings. Before selling his company, McCaw personally took over one of its subsidiaries, Teledesic, with the intention of building a global network of 840 low-altitude satellites to provide Internet-like transmission of digital data to the most remote places of the Earth. McCaw founded XO Communications to build his new telecom network, but by the end of 2001, the start-up found itself mired in $7 billion worth of debt. On June 17, 2002, XO filed for Chapter 11 bankruptcy protection.

Rebounding from the failure of XO Communications in 2003, McCaw founded Clearwire, a wireless broadband Internet service provider. Clearwire adopted WiMax wireless technology to transmit from a network of mobile phone towers. A fast, portable alternative to the cable modem and DSL services provided by cable television and telephone companies, it enabled subscribers to access the Internet without connecting to a land-based cable or telephone system.

Craig McCaw Biography Photo
The initial roadblock to building such a service was the relative paucity of available bandwidth. As a public resource, the airwaves are governed by the Federal Communications Commission, which assigns licenses to broadcasters, phone companies and other users through a regulatory process created years ago, when the demand for bandwidth was much lower. Major deregulation took place in the 1990s, but McCaw knew further changes would be needed to make wireless broadband accessible to the whole country.

For years, the 2.5-gigahertz band of the radio spectrum had been given over to schools and other institutions for public broadcasting purposes but had remained largely silent in most of the country. In 2003, McCaw signed a long-term lease agreement with a U.S.-based Spanish language broadcaster that held the country's largest 2.5 GHz license. In the next two years, McCaw would acquire nearly 1,000 such leases -- roughly 85 percent of the 2.5 spectrum band -- at an estimated 30-year cost of $5 billion. In 2005, the Federal Communications Commission deregulated the 2.5 band to permit its use for wireless broadband, and the value of McCaw's leases skyrocketed. His $5 billion investment was soon worth anywhere from four to ten times that much.

McCaw used his precious bandwidth to build a 4G (fourth generation) wireless network. This put him in direct competition with the two behemoths of the industry, AT&T and Verizon. While they had larger subscriber bases, Clearwire enjoyed a massive advantage in bandwidth, a commodity that had become far more expensive since McCaw made his prescient investment. McCaw, who served as Clearwire's first Chairman, took the company public in March 2007. The following year, Sprint Communications acquired a majority interest in Clearwire. With additional investments from Time Warner, Comcast, Intel and Google, Clearwire began building cell towers at the rate of one per hour, to offer 4G service in 50 cities across the United States, and planned to expand to Mexico, Belgium, Denmark and Ireland.

Craig McCaw Biography Photo
Craig McCaw and his wife, Susan Rasinski McCaw, make their home in Seattle, Washington. They have three children. Away from the office, Craig McCaw is an avid aviator who routinely pilots his own jet. He has long been active in environmental and civic affairs in his home state of Washington, and has invested millions in a campaign to convert a run-down industrial district of Seattle into a vast urban park. Mrs. McCaw, an investment banker, was a major fundraiser for the presidential campaigns of George W. Bush. From 2005 through 2007, the McCaws lived in Vienna, Austria, where Mrs. McCaw served as the United States Ambassador.

In 2010, Clearwire stumbled. The company's chosen operating system, WiMax, failed to catch on as an industry standard and was quickly eclipsed by newer technology. As Verizon and AT&T expanded their own 4G networks, Clearwire took on more and more debt. Sprint and Clearwire executives disagreed about the company's direction, while the two firms' interlocking directorships raised antitrust concerns. Three Sprint executives resigned from the Clearwire board and the beleaguered company laid off 15 percent of its staff. While Clearwire sought additional financing to complete its network, it was forced to consider selling precious spectrum rights to meet its debt obligations. In the last days of 2010, Craig McCaw stepped down as Chairman and resigned his seat on the Board of Directors.




This page last revised on Jan 04, 2011 16:17 EDT