McCaw returns as Teledesic's CEO

Telecommunications entrepreneur and Teledesic investor Craig McCaw will resume his former job as CEO of the company.

Paul Festa
Paul Festa Staff Writer, CNET News.com
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Telecommunications entrepreneur and
Teledesic investor Craig McCaw will resume his former job as CEO of the company, Teledesic announced today. The move is seen as an attempt to build a financial foundation for the underfunded sky-based Internet access company.

Teledesic was formed in 1990 with the goal of putting in place a low-orbit satellite network to provide worldwide high-speed Internet access by late 2002. But fund raising, which analysts describe as the company's number one priority right now, has not measured up to the company's high hopes

The company's efforts to generate interest in its mission also are lagging, according to Forrester analyst David Cooperstein.

"Teledesic needs to get serious about their business and get people who are going to take control and start telling a convincing story about the project they're going to launch," Cooperstein said. "They were rudderless up until now, but they should be able to tell the world that they're serious about what they're doing, or be able to tell the world, OK, we made a mistake."

Teledesic spokesman Roger Nyhus responded that the company was "adequately funded for the time being, and won't need additional funding until the construction of the satellites."

The company has to raise at least $9 billion to complete its satellite infrastructure. As of now, it has about $300 million on hand, estimate analysts, who see McCaw's renewed commitment to Teledesic as an attempt to rally a company threatened with being overtaken by competitors.

Cooperstein said that Teledesic has about a year to get its act together before competitors such as Motorola's Celestri project, or Alcatel and Loral's SkyBridge get past the initial stage of their respective launches and beat Teledesic to the skies.

"They've got to find serious partners, or go ahead and sell off the systems," said Cooperstein.

McCaw, 48, will share the CEO position with Steve Hooper, a longtime associate of McCaw and chairman of Nextlink Communications. Current Teledesic CEO David Twyver, who succeeded McCaw in the top job in October of last year, will join a new Teledesic executive committee devoted to strategic issues.

McCaw ascribed his promotion to his financial interest in the company--and to the interest held by Microsoft chairman Bill Gates.

"Because Bill Gates and I have so much personal interest in Teledesic, we've decided that it's best for me to play a more active role in the company's development," McCaw said in a statement.

Each of the technology billionaires holds a one-third interest in the company, with which they became affiliated late in 1994. That interest is thought to be about $100 million each. Gates has no title at Teledesic, other than that of personal investor.

Apart from its lag in fundraising, the company has seen a fairly busy year. In March, Teledesic received its license from the Federal Communications Commission. In April, it signed Boeing on to design, build, and launch its 288 satellites. Boeing, in turn, agreed to invest $100 million in Teledesic. Last month, the International Telecommunications Union's 1997 World Radiocommunication Conference allocated two 500-MHz bands of radio spectrum for the type of low-orbit satellites that eventually will make up Teledesic's system.

In addition to his duties as Teledesic chief executive, McCaw will remain chairman and CEO of Eagle River, a private company that invests in telecommunications ventures. McCaw was chairman and CEO of McCaw Cellular Communications, a wireless communications services provider, before it was sold to AT&T in August of 1994. McCaw also is a founder of Nextlink.