Craig's next move: With WNP buy, McCaw's Nextlink takes to the skies

It was, like most of wireless magnate Craig McCaw's business dealings, at once brilliant and enormous. Not to be outdone in the nascent broadband wireless area, Nextlink-a McCaw-owned competitive local exchange carrier-last month acquired WNP Communications, the biggest winner in last year's local multipoint distribution service auctions.

The $695 million acquisition, when combined with the spectrum McCaw's empire itself acquired during the auction under the bidding moniker Nextband, potentially puts the "Next" companies on par with the Teligents and WinStars of the broadband wireless world. Some observers say the business cases and plans of those companies are exactly what motivated McCaw to buy WNP.

"I think McCaw sees Teligent as having a brilliant marketing and regulatory strategy," said Ira Brodsky, president of Datacomm Research. "He's a genius when it comes to regulatory and marketing trends and how different elements play against each other."

To be sure, McCaw's long association with the wireless industry allows him to personally attest to the efficacy of the wireless weapon. Adding it in its broadband form to the already formidable fiber network Nextlink is creating makes the carrier's strategy far more flexible and far-reaching. Broadband wireless, after all, is the fastest way for a carrier to deploy an access network in cities where it may have extant fiber rings but has yet to branch out from there.

"If we get more than a quarter mile off of our fiber ring, it doesn't justify running fiber out, so then we lease T-1 lines from [regional Bell operating companies]," said Todd Wolfenbarger, a vice president at Nextlink. "With this acquisition we will supplement our fiber rings-instead of going to local incumbents, we will provide fixed wireless, so we'll own the quality of the network end to end."

That's exactly why Nextlink wanted the expansive spectrum swath WNP holds-and exactly why WNP was amenable to the acquisition.

"As their plans for their CLEC business started to emerge, we saw that they had impressive capabilities and fiber buildout plans," said Tom Jones, president and CEO of WNP. "That led us to get to know each other and compare notes on architectures to potentially develop compatible services."

Nextlink's timing also couldn't have been better. WNP is just ramping up, and having McCaw's name on its pedigree certainly will help it garner better equipment and financing deals.

"We were very close to a point where we were making decisions about equipment, securing additional sources of capital and bringing on additional senior management talent, and were in the very early stages of multimillion-dollar site acquisition work," Jones said. "We're very bullish on the combination of their strengths as a company and network and their licenses with our even larger licenses. We started out with the objective of bringing new competitive services to the marketplace, and we think this combination will accelerate that."

McCaw's entry onto the broadband wireless scene could definitely make life more complicated for the current contenders-particularly Teligent, which grabbed the spotlight early on primarily because of the coup it achieved in luring Alex Mandl from the number two spot at AT&T. What's more, Nextlink boasts a far more established wirelinebackbone than Teligent or any others.

"Nextlink will have multiple options," Brodsky said. "They will be able to go against Teligent and say they're not just providing a wireless link."

The next phase of broadband wireless activity, Brodsky said, could be for a CLEC endowed with LMDS licenses to link with a long-haul network operator and complete the link entirely.

"You'd think one of these guys would hook up with someone like Qwest and have a plan to make the whole thing end-to-end IP," he said.

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