Nearly six months to the day after bankrupt Metricom shut down its Ricochet wireless data service, the new owners have turned the Denver network back on as a first step toward resuming service.
Aerie Networks paid Metricom $8.25 million in cash for the Ricochet assets, including the networks deployed in 21 markets and 600 tractor-trailers’ worth of cell-site radios and wireless modems. That’s a bargain: Metricom spent about $1.3 billion on Ricochet before declaring bankruptcy in July 2001. Although Ricochet consistently offered 128 Kbps — twice as fast as the 2.5G mobile wireless services now being deployed in North America — it never became more than a cult hit, going out of business with only 51,000 customers.
At the Broadband Wireless World Forum, held last week in Anaheim, Aerie offered a post-mortem clinic and explained how the new Ricochet service would avoid the same fate.
One way is by using partnerships to reduce risk and cost. Metricom tried to do it all and didn’t realize until it was too late that it was better to farm out marketing, billing and customer care to resellers such as WorldCom and to focus on its core competency: building the Ricochet network. Worse, a former Metricom executive now says, it picked resellers that were too big, when it should have courted smaller, regional ISPs.
“Starting at the top of the heap is isn’t the place when building a distribution model,” Lee Gopadze, a former senior VP at Metricom, said at the Feb. 14 roundtable.
Aerie’s Denver test is an example of a different approach. The company is working with the city and county of Denver’s Office of Information Technology to see how Ricochet might serve local agencies. Although the Feb. 19 announcement doesn’t mention a long-term partnership with the Denver OIT, Aerie has repeatedly said that it wants to work with municipalities, utility companies and local companies to help defray the service’s cost. One example is to give an electric company free access to the Ricochet network for remote meter reading in exchange for allowing Ricochet cell sites on light poles.
“The majority of municipalities we’re working with are extremely interested,” John Griebling, CTO of Aerie, said at the roundtable. Griebling also stressed that Aerie won’t enter markets where it doesn’t have a partner lined up.
Like virtually every other surviving broadband-wireless provider, Aerie also is eschewing the build-it-and-then-sign-up-customers strategy that sank companies such as Teligent and Winstar. Instead of building an expansive network in a new market or relighting an entire network in an existing market, Aerie will turn on only some cell sites until enough revenue comes in to cover the cost of adding more sites. In San Diego, for example, Aerie initially will relight only about 60% of the city, Griebling said.
Indeed, coverage — or lack thereof — also helped sink Ricochet the first time around. Under Metricom, the service was aimed largely at business users, but that was a tough market to serve when Ricochet was available in less than two dozen cities.
Gopadze said Metricom should have marketed Ricochet to fixed users, such as home offices, or as a convenient, self-installable alternative to DSL. By partnering with regional rather than national ISPs, Aerie seems to have learned that lesson and now hopes to cater more to people who can’t get DSL or cable broadband where they live and work and less to those who need broadband where they travel.