McCaw Cellular Communications
| Company type | Private |
|---|---|
| Industry | Telecommunications |
| Founded | 1980s |
| Founder | Craig McCaw |
| Fate | Merged into AT&T Wireless Group in 1994 |
Key people | Craig McCaw (Founder, CEO), James Barksdale (CEO after merger), Steve Hooper (CEO after Barksdale) |
| Products | Cellular phone services, Cellular spectrum licenses |
| Parent | AT&T (from 1992 partial ownership, fully merged in 1994) |
McCaw Cellular Communications, Inc. was a trailblazing American cellular phone company. By strategically securing cellular spectrum licenses early in the 1980s, McCaw Cellular positioned itself ahead of the regional "Baby Bells" in the nascent telecommunications market. The company expanded its footprint by acquiring MCI Communications' mobile operations in 1986 and LIN Broadcasting in 1989, gaining entry into key US metropolitan areas. Collaborating with AT&T as its technology partner, McCaw launched the nationwide "Cellular One" service in 1990. AT&T acquired a 33% ownership stake in 1992 and completed a full merger with McCaw in 1994, elevating Craig McCaw to one of AT&T's principal shareholders. In 2002, the entity was spun off as AT&T Wireless Services.
McCaw Cellular Communications
In 1966, J. Elroy McCaw divested a cable television asset to his sons, including his 16-year-old son Craig McCaw, who subsequently grew the enterprise to $5 million in yearly revenue by the early 1980s.
Craig McCaw spotted potential in cellular telephony in 1981 after analyzing an AT&T forecast that projected 900,000 cellular subscribers across the US by the year 2000. He took advantage of affordable cellular spectrum licenses priced at $4.50 per population unit ("pop"), acquiring licenses in six of the thirty largest US markets by 1983. Utilizing these licenses as loan collateral and leveraging AT&T's subscriber forecasts, McCaw raised capital to procure spectrum assets valued in the billions. To finance additional license purchases, he sold the cable business for $755 million in 1987.
As analog cellular devices gained market acceptance, regional Baby Bells attempted to obtain licenses but were restricted by McCaw’s dominant spectrum holdings in prime markets unless they purchased surplus licenses from him at premium rates. He exploited this leverage to exchange licenses in less lucrative regions at discounted prices. In 1986, McCaw acquired MCI’s wireless division for $122 million and rebranded as McCaw Cellular Communications. Three years later, it outbid BellSouth for LIN Broadcasting’s licenses covering Houston, Dallas, Los Angeles, and New York for $3.5 billion—approximately $350 per license.
Cellular One
Transitioning focus from licensing to network operation and subscriber growth, McCaw partnered with AT&T for technological support. In 1990, McCaw Cellular deployed SS7 signaling technology to enable nationwide call routing and introduced the "Cellular One" brand along with roaming fees. That year, McCaw earned $54 million, becoming the highest-paid CEO in America.
The collaboration intensified in November 1992 when AT&T purchased a one-third equity stake for $3.8 billion. At that point, McCaw Cellular reported annual revenues of $1.75 billion and served two million subscribers—exceeding AT&T’s previous US cellular market expectations.
AT&T Wireless
In 1994, AT&T acquired the remaining shares of McCaw Cellular for $11.5 billion, constituting the second-largest merger in US history at that time. This transaction formed AT&T Wireless Group, which became the largest cellular carrier nationwide. Craig McCaw emerged as one of AT&T’s major shareholders but declined a board position to concentrate on Teledesic. Operational leadership transitioned to James Barksdale, followed by Steve Hooper after Barksdale left for Netscape.