'What happened to our baby?' McCaw alum ask
What was once a pioneering company that defied expectations had been reduced to an ailing giant in search of a caretaker, they said. They lamented a past in which AT&T Wireless, formerly McCaw Cellular Communications, would have done the shopping, not the other way around.
While it's not the first time McCaw Cellular has exited the stage, many believe it will be the last.
"You put all this emotion, time, effort, energy into an endeavor and build what was arguably the No. 1 cellular company that wound up merging with a very strong brand name, AT&T. It doesn't get much bigger than that," said John Chapple, chief executive of Nextel Partners and a former McCaw Cellular executive. "And then a mere couple of years later, it's on its way to extinction."
Some of that is nostalgia, he says. He's now peering in from the outside, along with many of the ex-mafioso.
But he also sees more AT&T Wireless customers switching to Nextel Partners than vice versa. The high number of customers leaving in recent months was shocking to him and other McCaw alum.
Leader no more
Others point to customer-satisfaction numbers, a leading indicator of the company's future financial success. In February, Consumer Reports put AT&T Wireless in the middle and bottom of the pack in its markets. Four years ago, the company was leading in customer satisfaction.
Then there's the company's financial performance. Compared with its competitors, AT&T Wireless generated less cash from each dollar it brought in during the fourth quarter of 2003.
The McCaw veterans shook their heads when AT&T Wireless experienced a multitude of software glitches transferring customer phone numbers, bringing down the hand of the Federal Communications Commission.
It's enough for the alumni to launch into the opening strains of "The Way We Were."
Back in the 1980s, McCaw Cellular was a band of cowboys in Kirkland led by Craig McCaw, who built a viable service out of an untested technology, even when naysayers predicted cellphone technology would never be cheap enough to sell to the masses.
A team of lieutenants scoured the country buying airwave licenses and cobbled together the first nationwide network.
In 1994, McCaw sold the company to AT&T in a merger that many thought would take it to the next level by combining Ma Bell's brand with a national wireless network.
Most members of the original McCaw team made their fortunes in the merger and went on to pursue new ventures: VoiceStream Wireless (now T-Mobile USA), Nextel Communications, Nextel Partners, Western Wireless and several Seattle venture-capital firms.
For a while, it looked like AT&T was still willing to give McCaw Cellular free rein. The post-merger head, Steve Hooper, had risen through McCaw's ranks.
To a company like AT&T, the wireless business probably looked chaotic. Inside, AT&T Wireless felt like an egalitarian society, with little hierarchy to stifle innovation. The company's mission put employee satisfaction above customer satisfaction.
Ma Bell sent Dan Hesse to take over in 1997, but instead of delivering AT&T's 10 commandments, he adopted McCaw Cellular's religion. The business was still thriving; AT&T Wireless became recognized as a technology leader among its peers.
Long-distance management
The turning point, observers say, came when John Zeglis, AT&T's general counsel, replaced Hesse as AT&T was preparing to spin off the wireless business as a tracking stock in 2000. He promised employees he would move to Seattle but never did.
Instead, he built a new office in New Jersey and ran the company 3,000 miles from its corporate headquarters.
He replaced executives with AT&T corporate faces. The organization became a molasses-thick bureaucracy. Managers abandoned the company in noticeable numbers.
Its momentum slowed to a plod that came to a halt in December when the stock fell to about $7. Nextel Communications, a company with about half as many subscribers, was valued at $9 billion more than AT&T Wireless.
"Its performance has lagged behind its direct wireless competitors," said Donald Guthrie, a former McCaw Cellular executive who is now vice chairman of Western Wireless.
Some say Cingular's staggering $41 billion offer is just more evidence of how far AT&T Wireless has fallen below its potential.
"Some of the old warriors would have liked to have seen a different outcome," said Chapple.
It's a bitter pill to swallow for the old-timers, most of whom are turning 50.
A surprise party for Hooper's 50th birthday last year became a McCaw reunion. Some 300 wireless-industry luminaries showed up in Bellevue to roast Hooper and went on to wax poetic about McCaw Cellular and the good ol' days.
"It was a lovefest, not just for Steve but for this great company and this great culture," said Dan Hesse.
Chapple still runs into ex-McCaw folk about town. More often than not, they'll ask him, "What happened to our baby?"
Sharon Pian Chan: 206-464-2958 or schan@seattletimes.com