Power off: Metricom unplugs wireless network
Metricom will silence a 17-city network that will likely be auctioned off for just a fraction of its $1 billion price tag.
According to a company executive, at 6 p.m. PDT Metricom will power down equipment that helped to support 51,000 wireless subscribers around the country. A skeletal crew of Metricom executives--what remains of a staff that once topped 300--will spend the next six to eight weeks shuttering what's left of the company's operations.
Many of Metricom's loyal customers expressed disappointment after the company announced it would go out of business. Metricom filed for Chapter 11 bankruptcy protection after failing to find a buyer for the company.
Customers said the wireless Net service was worth the lofty $80 a month, despite a connection that ran at 128kbps--roughly twice the speed of a dial-up modem, and half the speed of digital subscriber line (DSL) service.
"I can't live without my Ricochet," said Southern California real estate agent DeeDee McGann. "I'm so totally disheartened that this will go away."
Several Metricom executives declined to comment on the shutdown.
Some customers have flocked to Web sites to vent their anger, or explore how to find other service providers. One site, NewRicochet, is still under construction and meant to gather enough subscribers and their cash to try to buy the network and launch it once again. The second site is Save Ricochet.
A resurrected Ricochet is likely the only alternative for those subscribers, as the only network the Ricochet modem was able to operate on is the same network being unplugged Wednesday.
Ricochet resellers Wireless Web Connect, GoAmerica and Compaq Computer all say Ricochet users can still go online if they buy a new modem. Before reselling Ricochet service, companies such as GoAmerica operated their own similar, but slower, services. These alternative services are available and are cheaper--about $50 a month--but operate at a speed of 19kbps, about seven times slower than the Ricochet service.
Some companies that once offered Ricochet service are getting out of the wireless provider business. WorldCom, the largest investor in Ricochet, says it won't be seeking any immediate alternatives for its customers.
McGann and other Ricochet customers say they likely will not sign up for new wireless services, despite pushes by Ricochet resellers, like GoAmerica, to retain the subscribers on new plans.
"Once you get used to these high speeds, I feel like I'm going back to the Dark Ages," McGann said.
As they shutter the company, Metricom executives also are going to be readying much of it for sale at an auction scheduled for Aug. 16.
Some companies that might express interest at the auction include those that previously considered buying or investing in Metricom before it began shutting down the service, including AOL Time Warner, Verizon Wireless and investor Craig McCaw, according to various sources.
A spokesman for McCaw said it was unlikely McCaw would take part in the auction at this point. Spokesmen for AOL, AT&T Wireless and Verizon would not comment.
Items for sale include patents the company received for a way to transmit data through the air, the rights to use some radio spectrum, and hardware such as pole-top antennas.
The balance of the company's assets, estimated at between $120 million and $140 million, has been set aside to pay creditors and bondholders. Metricom left a debt trail of approximately $1 billion, according to records on file at U.S. Bankruptcy Court in San Jose, Calif., where Metricom filed for Chapter 11.
Metricom was founded in 1985. It launched the Ricochet service in the mid-1990s, with the aim of becoming a nationwide network. Some of its biggest investors included Vulcan Ventures, the venture fund started by Microsoft co-founder Paul Allen.
But the national expansion stopped at about 17 cities sometime in February, when the company told investors it was going to run out of cash. It went through at least two rounds of layoffs to trim staff and tried to find a buyer.
"Metricom's value was much more of a regional play than a national network," said GoAmerica CEO Aaron Dobrinsky.
Analysts think the company's failure was due, in large part, to trying to build a national network. It simply proved too expensive, and there were not enough customers. The company had 51,000 customers when it filed for bankruptcy, which analysts said was not enough to justify further investments from outsiders.
It also relied heavily on its resellers to market the service, which also might have proved fatal, according to analysts.
Metricom's demise has had some ripple effects already. Sierra Wireless of Vancouver, Canada, says it has about $10 million in inventory that it might never get paid for as a result of the Metricom bankruptcy. Sierra also told investors that it had to fire about three dozen employees because of Metricom's financial problems.
"It's such a shame because Metricom was such a good product," said Alan Reiter, of market watchers Wireless Internet and Mobile Computing. "Hopefully someone will come by and get it going again."