Daniel F. Akerson, the new chairman and chief executive of Nextlink Communications Inc. -- soon to move its headquarters from the Seattle suburbs to Northern Virginia -- does not like hearing his company referred to as a CLEC, industry jargon for Competitive Local Exchange Carrier. In short, an alternative local phone company.
Yes, he grants, the company makes money by convincing businesses to fire the entrenched local phone companies and instead hire Nextlink for local service. And, yes, much like other CLECs, the company deploys antennas on the tops of office buildings, beaming telephone connections through the airwaves to its network, bypassing the Bells in the process.
But Akerson, who took over last month after three years at the helm of Nextel Communications Inc., the national cellular phone company, points to other assets to distinguish Nextlink from its rivals: a national fiber-optics network now being built that will, by the end of 2000, link 60 of the nation's largest markets, allowing the company to competitively sell local, long-distance and high-speed computer data transmission services to business customers in a single package.
"The seeds are certainly here that someday should grow into a great, fully capable national telecommunications competitor," Akerson said in a recent interview. "We're not a CLEC. We have this national network. We're on a course to compete."
Such talk sounds bold from a man heading a business that last year claimed less than $140 million in revenue on the way to losing $278.34 million, in an industry increasingly ruled by enormous scale.
But Akerson has a history of growth. When he took over as chairman and chief executive in March 1996, Nextel was a fledgling cellular company that counted subscribers in the thousands and revenue of about $333 million a year. When he left in July Nextel boasted nearly 4 million customers and revenue beyond $3 billion.
"What Akerson brings is strong operating experience and strategic vision," said John D. Doughty, a telecommunications analyst at Credit Suisse First Boston. "He will push Nextlink to the next level."
Wall Street as a whole appears to share that view. CLECs as a group have gained price steeply over the past year, as companies have plucked lucrative business customers from their Bell rivals. But Nextlink has fared particularly well: A year ago, a share of Nextlink stock could be had for less than $10. On Friday, the stock closed at $56.87 1/2.
Not lost on the market is the fact that Nextlink was launched, five years ago, by cellular pioneer Craig McCaw, who still owns roughly a third of the company and controls about 60 percent of the voting stake. That pedigree has given Nextlink an advantage when it comes to raising the capital to build out its network and become a truly national player.
"The fact that McCaw and his partnership are sort of the prime investors, that's a major driver behind their success," said Rolf De Vegt, vice president of the business strategy group at Renaissance Worldwide, an industry research firm.
Now, Nextlink is poised to become the latest entrant to the Washington area's burgeoning high-tech world, joining its rival CLEC, Teligent Inc., which is based in Vienna.
Earlier this month, the company announced plans to move its corporate headquarters from the Northwest to an as-yet-undetermined place in Northern Virginia. The company plans to maintain its current home in Bellevue, Wash., as a regional headquarters. Akerson said the company is now negotiating to lease space somewhere in Northern Virginia, though he declined to be more specific.
Nextlink's basic mode of operation is hardly revolutionary: Through a complement of antennas placed on rooftops of office buildings and a network of fiber buried beneath the pavement, the company competes with local Bells for customers.
But Nextlink has proven particularly adept at claiming federal licenses for new spectrum to enable it to carry more telephone calls and data than its competitors. The company says it now owns enough of the airwaves to allow it to sell service to 95 percent of the businesses in the nation's 30 largest markets.
"That's a very attractive asset," said Elizabeth Henderson, a Chicago-based analyst with Duff & Phelps Credit Rating Co. "It's a much safer strategy than just going into a city and building fiber, where you're not sure how much demand there is."
Wireless links, she explained, are significantly cheaper to deploy than fiber optics, which carry immense flows of phone calls and data at rapid speed, but necessitate digging up streets at not inconsiderable cost.
Over the next year to 18 months, Nextlink expects its national fiber-optics network will be completed, weaving for some 16,000 miles around the country, connecting its markets and allowing it to sell what is known as "end-to-end service" -- connections handled by one company from beginning to end. Until the network is complete, the company is leasing capacity from existing networks.
Service is now up in 45 markets, including Washington. The company plans to expand into 15 new markets over the next 18 months. It is also bidding for new spectrum in Canada, as it moves to become a full North American player.
Analysts generally assume that CLECs will be swallowed up by the industry's biggest players, such as AT&T Corp., MCI WorldCom Inc., Bell Atlantic Corp. and SBC Communications Inc. Akerson said some CLECs -- he declined to name names -- clearly appear to playing that way, clustering their holdings in single regions.
But Akerson maintained he has no such strategy in mind for Nextlink, preferring to take on the titans as he builds out. It is a course analysts say privately is not realistic: In communications, size may not be all, but it counts for a lot.
"We'll just have to use their size against them," Akerson said. "A smaller company can be faster into new markets. There's a certain attacker's advantage. I'd rather attack than defend."
A Look at ...
Nextlink Communications Inc.
Headquarters: Bellevue, Wash. (moving to Northern Virginia later this year)
Business: Builds fiber-optic rings in cities to provide local and long-distance phone service, primarily to businesses
Founder: Craig McCaw
CEO: Daniel F. Akerson
Symbol: NXLK (Nasdaq)