Wholesale Channel - Metricom's Ricochet Loses Momentum, Shuts Down

By Tara Seals

Posted: 10/2001

Wholesale Channel

Metricom’s Ricochet Loses Momentum, Shuts
Down
By Tara Seals

Metricom Inc. has shut off its Ricochet high-speed wireless Internet service in all markets and closed its doors.

The shutdown came despite hopes it could maintain network operations after the company filed a voluntary petition for reorganization under Chapter 11, in the U.S. Bankruptcy Court in San Jose, Calif.

When the petition was filed in July, the outlook seemed somewhat hopeful: The company expected to continue providing services and access to resellers, channel partners and direct customers in its 15 metropolitan markets, to keep the network operating and to reorganize debt obligations.

Following an Aug. 1 hearing in the bankruptcy court, however, the company’s board of directors decided to close down the Ricochet network, wind down Metricom’s business affairs and auction off its assets.

Metricom’s resellers, and those resellers’ agents, were bullish on the service three months ago, and surprise has resonated through the community.

“I was personally very disappointed with the bankruptcy filing for Metricom,” says Ted Schuman, president and CEO of reseller PlanetOne Communications Inc. “We know they had been struggling for the last few months, but I’m shocked they weren’t able to raise additional rounds of funding to continue their network expansion and deployment.”

Metricom says it intends to work with its resellers and channel partners to effect a smooth transition.

The company seemed to have a lot going for it: The service was very fast, clocking in at 128 kbps, and Metricom was backed by WorldCom Inc. and Microsoft Corp. co-founder Paul Allen.

But at the end, the numbers didn’t add up. Metricom spent $1 billion on network buildout and had only 51,000 subscribers by the time it filed with the court.

Observers blamed pricing and limited service areas for Ricochet’s demise. The service was billed as an alternative to DSL. Subscribers were charged $300 for a modem, then $69.95 per month for an unlimited service plan.

Unfortunately, Ricochet was a non-roaming service. In other words, if you left one of the 15 markets, you were out of luck. This made it less than attractive to the lucrative business “road warrior” market.

Still, many resellers saw a market for the service, particularly if Metricom had snagged the funding to achieve its goal of a 40-market presence by the end of the year. That much of a footprint would have lessened the impact of not being able to roam.

“Metricom went through extreme transformations during its tenure,” says Becky Diercks, director of wireless research, at Cahners In-Stat Group. “Initially, it acquired its own sites, built its own modems and its own network and also was a network operator. By the end, it had outsourced everything and was a wholesale service provider.

“Metricom boldly went where no one had gone before,” she adds. “This worked well for the crew of the Starship Enterprise, but unfortunately not for Metricom. We wish it a fond farewell.”