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McCaw Places New Bet On Faster, Cheaper Access
Clearwire to Launch Cellular Internet Service


  Telecommunications pioneer Craig McCaw says he will cut conventional wireless Internet rates in half. (Dayna Smith - The Washington Post File Photo)

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By Yuki Noguchi
Washington Post Staff Writer
Thursday, June 3, 2004; Page E05

Craig O. McCaw yesterday told an audience of wireless experts that after years of investing in cellular, satellite and local phone upstarts, he has come up with a new strategy for delivering high-speed wireless Internet access at a price lower than that charged by cellular companies.

McCaw has purchased a company called Clearwire Inc. for an undisclosed amount and will use its name and resources, as well as technology developed by another McCaw-owned company, NextNet Wireless Inc., to launch his latest effort.

The NextNet technology transmits high-speed Internet access using a paperback-book-sized device that plugs into an electrical wall socket. The wall device transmits data from a computer to a receiver similar to a cellular-phone tower at faster speeds than most cellular networks, McCaw told several hundred people gathered for the Wireless Communications Association International Conference here.

Clearwire plans to introduce its service first in Jacksonville, Fla., and St. Cloud, Minn., and eventually in Canada and Mexico.

It will face intense competition. Verizon Wireless, the largest provider, plans to roll out one of the fastest cellular services to about a third of the country by the end of the year. In April, Nextel Communications Inc. -- a company in which McCaw used to be a major investor -- also started selling a high-speed service on a limited basis in North Carolina.

Most cellular-Internet offerings cost about $80 a month. McCaw said Clearwire's rate will be about half that much.

Jeffrey Nelson, a Verizon Wireless spokesman, declined to comment specifically on McCaw's plans, but said the type of applications being offered by Verizon Wireless "provide great value to our customers." He said Clearwire's services "may well be competitive -- it's a competitive marketplace -- but we're operating today with clear rollout plans."

For McCaw, the acquisition of Clearwire is an extension of a career devoted to investing in new firms with an eye to toppling older, more established technologies. He founded McCaw Cablevision, which he sold to Jack Kent Cooke's Cooke Cablevision, and then founded McCaw Cellular, which he sold to AT&T Corp. for $11.5 billion in 1994. He later was a major early investor in companies such as Reston-based Nextel and XO Communications Inc.

Despite his soft-spoken presence, McCaw harbors fierce ambitions to challenge big competitors.

"We're entrepreneurs, and we see things that we think ought to be done," McCaw said in an interview. He has been trying to figure out how to get communications into people's homes through wireless networks since he started a working group called Project Angel in the mid-1990s, he said.

He readily acknowledges some of his forays into the satellite and local phone business have been expensive failures, and says that "time will tell" if his new vision will prove successful. McCaw said he has spent the last couple of years developing a technology and strategy, knowing he will face tough competition. "You need to be fairly well organized when taking on an incumbent," said McCaw. "It's really about moats, and they put a lot of snakes and piranhas in there," he said.

So far, upstarts have not had an easy time taking on the dominant cable and cellular companies. "For the past 15 to 20 years we've been seeing people trying to attack that [wireless Internet] business and not succeeding," he said. "As we're walking over the bodies of our brethren, we're asking, 'How can we avoid this?' " The answer, he concluded, is this: "Above all, it has to be simple, cheap and high-quality."

An issue that could pit Clearwire against its established rivals is before the Federal Communications Commission. The FCC is considering allowing educational groups to sell the airwaves they use for broadcasting distance-learning videos, a move that could open up more airwaves for commercial use. McCaw is opposed to the change because he says it could result in the bigger cellular companies outbidding other commercial users.

The FCC could take the issue up in its public meeting next week, according to some sources close to the commission. Home

© 2004 The Washington Post Company

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