Alan Bender ’79: A gamble on cell-phone technology pays off

February 18, 2008Duke Law News

As a law student, Alan Bender’s career plans mirrored those of most of his classmates. “I was going to interview to get a job at a big firm, work really hard, become a partner, and stay there for a fulfilling career,” he told Duke Law students on Feb. 8 as the keynote speaker at the Business Law Society’s sixth annual career symposium. Thanks to his realization that a law-firm partnership was not his path to fulfillment, Bender’s career has unfolded very differently: In 1988 he left a Wall Street securities practice to join a new wireless company eventually building the telecommunications giants Western Wireless Corporation (now Alltel) and VoiceStream (now T-Mobile). He now serves as managing director of the Trilogy Partnership in Seattle.

His move to GCC was actually Bender’s second foray into the corporate world; his first ended when his employer was effectively “legislated out of business” by the passage of the Tax Reform Act of 1986. He used the opportunity to “beef up” his skills through a senior position with Kaye Scholer in New York, but left in 1988 to join GCC, a start-up based in San Francisco, focused on building a market in rural cellular communications.

It was a risky move, he acknowledged ― he had a young family and cell phone technology was then viewed “as a rich plaything” that would likely be a passing fad. “But my passion was to be able to guide the business through stages of rapid growth and profitability and to do it in a way that had my fingerprints firmly planted upon it. I wanted the opportunity to impact each and every significant development of the company that we came to think of as our corporate baby. I also wanted exposure to wide and varied legal issues that were going to arise, and each and every one of these things, fortunately for me, came to occur.”

After the Federal Communications Commission (FCC) gave spectrum away through a lottery, Bender and his partners ― a small group with complementary areas of expertise in business, finance, engineering, investment banking and law ― offered company stock to some of the winners, thus acquiring ownership of a series of strategically chosen cellular markets. Still, the venture found it difficult to raise capital in an equity and credit market shaken by the Persian Gulf War and an economic downturn, and it filed Chapter 11 bankruptcy in 1991, said Bender.

Thanks to a solid business plan, the company was able to attract venture capital and restructure, coming out in 1992 as a stronger company, with an equity compensation arrangement for management that garnered value only if the shareholders’ stock grew in value. “Management’s incentives were totally aligned with its shareholders’ interests,” said Bender, who observed “that you never become a better negotiator than when your back is firmly up against the wall.” The original management team remained intact, with Bender serving as general counsel and head of regulatory affairs, risk management, facilities management, administration and human resources, “the toughest job in the world.”

Western Wireless Corporation in 1994 was founded when the newly prospering GCC merged with a Seattle-based company to take a leading share of cellular markets in the rural, western United States. VoiceStream was founded as a subsidiary of Western Wireless in the mid-1990s after Bender, his partners, and shareholders, purchased PCS spectrum at an FCC auction. They took Western Wireless public in 1996 in the largest public offering in the state of Washington at that point. VoiceStream, which later became an independent public company, became a member of the NASDAQ 100 in 1999.

An infusion of capital from Hong Kong-based Hutchison Whampoa allowed VoiceStream to go on an “acquisition binge” in 2000, Bender said. Using its publicly traded stock, VoiceStream bought up all the other companies in the U.S. that used its global systems mobile (GSM) technology. That “national GSM footprint” attracted enormous attention from global telecommunications companies seeking a U.S. foothold. In 2000, the VoiceStream board accepted a $52 billion buy-out bid from Deutche Telecom, making it the second-largest cross-border merger in U.S. history at that time.

“I spent the next year explaining to Congress and the FCC why this deal was in the public interest and deserved approval,” said Bender, explaining that FCC regulations limit the control of U.S. telecommunications spectrum by foreign governments. It closed on May 31, 2001. “We pushed to get that deal closed because you never know what’s around the next corner,” he said. “Had Sept. 11 occurred before we closed, there’s no way the FCC would have permitted a foreign government-controlled entity to control U.S. spectrum.”

Due to their “great trust and faith in each other,” Bender and his original handful of partners formed the Trilogy Partnership, through which they operate wireless markets in third-world countries such as Bolivia and Haiti and invest in early-stage start-ups through a private equity fund. “It’s our opportunity to be on the other side of the stage, offering capital and guidance, sitting on the boards, opening some doors and helping young entrepreneurs who have brilliant ideas and wonderful energy,” he said.

Bender credited his success to many factors, among them a continual appetite for learning and “outworking” everyone else, an honest evaluation of his own career goals, a firm belief in the business plan that he and his colleagues had put together, and their commitment to the highest standards of integrity in their business dealings. The support of his wife, Joyce, was invaluable, he said.

“She encouraged me to take some calculated risks and understood the uncertainties. She also understood the time demands necessary in driving for success. You have to have that very clear understanding within your household about how is this going to play out and what are the costs? I was fortunate in that I think it played out pretty well.”
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