Mention of G* near the end of the article
iht.com
A Wireless Pioneer Is Shooting for the Stars
Peter S. Goodman Washington Post Service Wednesday, April 25, 2001
NEW YORK If he were anyone but Craig McCaw, wireless telephone pioneer, his plans might be dismissed as fantasy.
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He is building a network of satellites that will encircle the Earth, beaming high-speed Internet connections and telephone calls to any point on the globe.
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He is doing this though other such ventures have failed on a cosmic scale.
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First, there was Iridium LLC. Its brick-size $3,000 phones did not work indoors. The company nearly scrapped $5 billion worth of satellites, tipping them into a fiery plunge back to Earth, before it was bought out of bankruptcy for $25 million. A similar business, Globalstar Telecommunications Ltd., could yet meet that fate.
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In the view of most analysts and industry players, they are victims of cheaper, terrestrial technology. As the satellites were being built and launched, cellular towers were proliferating on Earth, taking away part of the market the space-based services hoped to serve. A futuristic technology had become obsolete.
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Mr. McCaw cringes at such characterizations. He is loading the rockets for another try. He plans to shrink the phones and expand their range by combining satellites with a wireless network on the ground - a step that requires a controversial rule change from the Federal Communications Commission. Then, he said, the model works.
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"It's often very small things that make a difference," Mr. McCaw said in his hotel suite on the Upper East Side of Manhattan. "There has never been somebody successful. Not because the need isn't there. There's a crying need. But speaking as a user of these services, they all stink. The service quality is poor. It's extremely expensive."
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Despite the pessimism enveloping the satellite telephone business, Mr. McCaw is moving forward with New ICO, a system he rescued from bankruptcy last year. He plans to launch his first satellite in June - the second, if you count the one that crashed last year. He aims to begin service in 2003.
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He is pressing ahead with a scaled-down version of Teledesic, his still vaguely defined "Internet-in-the-Sky," a project he shares with his childhood friend Bill Gates, the chairman of Microsoft Corp. It features a massive constellation of satellites - 288, as first contemplated - capable of delivering enormous amounts of computer data anywhere.
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Given the backdrop, some think that Mr. McCaw is blasting his wealth into oblivion, chasing after a market too small to pay the considerable freight of satellites.
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"McCaw tends to be captivated by the satellite sector," said Andrew Cole, an analyst at Adventis Corp., a communications strategy consulting company in Boston. "He's a little, excuse the pun, starry-eyed."
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But Mr. McCaw says that his critics misconstrue the nature of technological innovation: It moves by fits and starts. Those who fail leave behind critical lessons for those who eventually succeed. They also leave valuable assets at sharply discounted prices. In taking control of ICO, Mr. McCaw captured a nearly $5 billion investment for $1.2 billion. Iridium, rescued for pennies on the dollar, is again in business.
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Mr. McCaw's history is intertwined with that of modern communications. His father, Elroy McCaw, assembled a group of commercial radio stations nationally in the 1930s and 1940s from his base in Seattle. Then he branched out into television broadcasting and cable. When Craig took over the family business, he expanded the cable holdings and entered the early paging business.
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And when the communications commission opened the airwaves for the first cellular telephone licenses in the early 1980s, Mr. McCaw positioned himself at the center of the new industry. Through successful license applications and shrewd purchases, he created the first national wireless telephone network, selling it to AT&T Corp. in 1993 for $14.5 billion. Then he rescued a floundering mobile telephone business, Nextel Communications Inc., turning it into a national network.
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While that history may seem neat and linear in retrospect, Mr. McCaw emphasizes the uncertain steps and failed ventures along the way, the lag times between sound ideas and sound businesses. AT&T offered the first mobile telephone service in 1946, but it did not sign up millions of customers until a half-century later, when cellular technology shrunk the phones and lowered the prices.
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As Mr. McCaw portrays it, the problem with Iridium and Globalstar was not a lack of demand. Large areas of the planet remain beyond the reach of cell towers. It will never be cost-effective for wireless carriers to serve towns tucked between the ridges of the Shenandoah, he argues. Oil rigs perched atop the globe on Alaska's North Slope are best reached from space. The first crop of companies aimed at these markets simply botched the technology and failed to satisfy customers. "Making them carry around a brick all of the time isn't going to work," he said.
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Iridium's phones were made heavier by the extra-large antennas and radios needed to send calls to the satellites. Mr. McCaw plans to use standard-size cell phones, by separating the antennas and radios into a separate unit. Customers could mount these antenna units on their cars or carry fold-up versions in a pocket or a purse, placing them near windows when inside buildings. A wireless transmission technology called Bluetooth would then connect the phones to the antenna devices.
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Mr. McCaw has also opened up ICO's satellites, which are still on the ground, in a hangar in Los Angeles, and added systems to increase the data-transmission speed. Alongside voice telephone calls, high-speed Internet links are now a selling point.
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Mr. McCaw argues that the success of ICO is a crucial proving ground for satellite technologies - a method of finding the best way to reach rural areas with services. Unless ICO is a success, Teledesic will stay grounded as well, further impeding the spread of services to the hinterland. "We're sort of the last best chance for this segment of the market to work," he said. |
