PCS Wireless - Overview and History
Playing a pivotal role in the rollout of 2Ghz cellular networks in the 1990s
Nature of the business
I co-founded PCS Wireless in 1993. It was a developer and manufacturer of cablevision based cellular base-station distributed antennas. The Company entered into strategic joint venture partnerships with ADC Telecommunications and Allen Telecom in 1996, and eventually merged with Unique Broadband Systems in 1997. The key assets of PCS Wireless were initially acquired from the Nexus Group of Companies (see Nexus Engineering - Overview & History).
PCS Wireless was both a technical and financial/return-on-investment success, stemming from its unique, pivotally important wireless products and patents, as well as its corporate valuation increase from an initial $2.7 million pre-pubco in 1993 to more than a $2 Billion market cap at its peak in 1999 (post merger with Unique Broadband).
PCS Wireless played a significant role in the rollout of 'next generation' 2Ghz cellular networks in the mid 1990s with its 'distributed antenna array' RAD/MEX technologies - products that allowed for centralized cellular base stations and flexible distributed antenna leveraging existing cable-TV infrastructure. Its customers included literally all of the major telco equipment providers: Nokia, Motorola, Ericcson, Nortel and AT&T, as well as all of the top US cable-TV network operators: Cox Cable, Cablevision Systems Corp, Adelphia, US West, TCI, Jones and Time Warner.
PCS Wireless, its technologies, and successful pre-FCC auction field trial results, literally changed the landscape of the 2Ghz wireless auctions by encouraging the formation of a cable-TV network operator alliance with Sprint Communications, which was to become the lead successful bidder in the 1995 FCC auctions, paying more than $7 Billion in license fees for a US national network - all potentially to be based on PCS Wireless' RAD/MEX technologies. For this reason, investment banking analysts predicted in early 1995 that PCS Wireless' market potential for its products was in excess of $1B - with an exclusive patent protected technology/product offering.
My role as co-founder and President/EVP of PCS Wireless gave me valuable experience running a dynamic, fast moving technology company, and its public company status rounded out my knowledge and experience dealing with public company issues, boards of directors, investors, and financial institutions. PCS Wireless' success also granted me financial independence and allowed me to pursue my dream of creating and funding my own technology company, Intrinsyc Software (see Intrinsyc Software - Overview and History).
The story of PCS Wireless started with my employment position as a VP of Nexus Engineering a few years earlier. The RAD (Remote Antenna Driver) and MEX/BEX (Microcell Extender/Base station Extender) technologies were acquired from Nexus in late 1993 after development and trials driven by Dr. Basil Peters (CEO of Nexus) and his relationship with Roger Communications in Canada as well as many of the leading US Cable TV providers in the US spanning 1991 to 1993. The board of directors of Nexus had voted to sell their core business, their cable TV infrastructure product lines, to Scientific Atlanta in the summer of 1992 (see Nexus Engineering - Overview and History for more information), so my old boss, Ralph Scobie, from Integra Systems days (see Integra Systems - Overview and History for more information) and I joined forces and offered to acquire the assets of PCS Wireless from the Nexus shareholders.
The early days of PCS Wireless
While I had some early experience with being a manager in a public company from my days at Integra Systems, I had never before been so totally immersed in the world of public financings, bankers, investors and promoters who were part of the public company game. As a naive 'engineer' who thought 'linearly' about problem solving, this was a real eye-opener for me. While I struggled to come up to speed, I quickly realized that I need two distinct skill sets to survive and prosper at this game: operational/technical excellence in terms of running the company, and street smarts and deft handling of the power politics, fear and greed that ruled the investment banking world we were now playing in.
The lead-up to the FCC Auctions
Once the dust had settled on the PCS Wireless acquisition and IPO we realized that it would be a few more years before the RAD/MEX technology and the wireless markets were truly ready for our vision of a 'distributed antenna' based cellular universe. Our stock price languished, and some of our most hoped-for early customer deals fell through or were delayed to the point that by the end of 1994 we were running out of money and it looked like we were going out of business.
There were positive signs that the FCC 2Ghz wireless spectrum auctions were going to proceed in the spring of 1995, and due to the fact that our RAD/MEX technologies were classified by the FCC as 'pioneer preference' technologies, any auction bidder who deployed our technologies would be offered a 15% discount on the successful price of wireless spectrum. All we had to do was hang in there and our ship might indeed come in . . .
We received a call from Ericcson's top US sales executive in 1994 that would change the fate of our little company. He wanted a quote for 10,000 RADs ASAP - these were almost $10,000 each so he was asking us for a quote worth close to $100 million.
No sooner had we hung up the phone with Ericcson than Motorola's executive offices in Schamburg, IL called us up and said 'hold the presses - don't do an exclusive deal with Ericcson'. They suggested that they could arrange for a $500,000 advance towards an eventual RAD/MEX deal with them. We ended up telling everyone that we would not enter any exclusive deals, took Motorola's money, and waited out the FCC's auction process.
The FCC Auction results, our customer orders, our stock heads north
Once we heard that our cable-TV network operator customers had formed an alliance with Sprint called 'Sprint LP', had bought up a complete national network, and had emerged as the lead 2Ghz network provider, we realized that our world was about to change - in a big way (see our news release 'FCC Auction Ends, PCS Wireless' Customers Amongst the Winners').
Within days of putting out our news release of a deal with Motorola and the above noted news release in early March 1995 we were in play in the public markets. We were able to quickly close an $11M financing lead by Canaccord and Sprott Securities, which was taken down by the 'who's who' of the Toronto institutional scene, and our stock caught fire. Bankers and investors at the time told us that PCS Wireless woke up the tech sector in the Canadian public markets which rebounded in part due to the very active trading in our stock (see PCS Wireless Press Coverage and Stock Trading Data).
Another few weeks into April 1995 and we had closed over $40M in RAD/MEX equipment orders and had pitched all of the top tier institutional fund managers, counting Fidelity Investments (www.fidelity.com), Putnam Investments (www.putnam.com), and Altamira (www.altamira.com) as our largest shareholders by that time. We were toasted in NYC and San Francisco by the leading tech bankers there who were encouraging us to list on the NASDAQ stock exchange. And our future never looked so bright.
Sprint reverses direction, Ericcson cancels our deal, our fate shifts
Within a few months all of the leading telco equipment providers had announced deals with us but there was dark cloud forming in the distance. Spring LP had raised most of its investment capital from European sources - primarily France Telecom and Germany Telecom (about $4.6B) and various US industry insiders in high places were making noises about the optics of using European $ to fund the rollout of a US GSM based cellular network (using European sourced technology). Sprint faced mounting pressure from Washington, that was in a position via the State Department to disallow them their $4.6B funding, to switch from GSM to CDMA technology - an unproven American cellular network standard.
PCS Wireless had worked with both GSM and CDMA technologies, but in a twist of fate, we had decided to focus almost all of our development and marketing efforts on GSM technologies as that was clearly where our customers were focusing themselves. When the Sprint announcement to switch to CDMA technology for its network rollout hit the news wire in the summer of 1995, we were shocked. Not only did our customers lose their huge contracts, but our contracts with them were immediately thrown into question.
PCS Wireless JVs/sells the RAD/MEX products to ADC Telecommunications and Allen Telecom
We went into a defensive posture corporately, with the bottom falling out of our corporate valuation. I was asked to fly to Boston to meet with the head of Fidelity Canada, Alan Radlo, where he suggested that Intrinsyc immediately seek out the protection of one or more investment JV partners for the continued development of the RAD/MEX technologies. Fidelity had pre-existing strategic investments into ADC Telecommunication and Allen Telecom and after they made the introductions and I wrote letters of inquiry to their Chairmen and CEOs the planes flew into Vancouver and we started to negotiate.
PCS Wireless Merges with Unique Broadband
I started to think about my own future outside of PCS Wireless in the fall of 1995. By January 1996 I was out of PCS Wireless operationally and off the board after we completed the two JVs with ADC and Allen Telecom - resulting in the eventual transfer of the RAD/MEX technologies to those firms. In 1997 PCS Wireless entered into the Unique Broadband deal that saw these two Canadian telecom entities merge.
PCS Wireless, in its new guise as Unique Broadband, caught the wave of the Internet mania in 1999 and eventually saw its stock rise to $17 on over 15 million shares of daily trading volume, reaching a peak corporate valuation of more than $2 Billion in 1999.