The Return of Ricochet
By Jeff Goldman, Tue Sep 17 00:00:00 GMT 2002

The high-speed mobile wireless service is back, and it?s learned from its mistakes.


In July of 2001, after spending $1 billion to build a wireless network across the U.S., Metricom, Inc. filed for bankruptcy. A month later, it shut down its Ricochet high-speed mobile network: its 51,000 subscribers, each paying as much as $79.95 a month, were left without service.

Now, just over a year later, Ricochet is back.

Aerie Networks had raised more than $140 million to build a nationwide fiber optic network, but last fall, recognizing a shift in the market, it changed its business plan. The company instead purchased Ricochet’s assets, including intellectual property, wireless equipment, and customer lists, for the bargain price of $8.25 million.

Last month, the new Ricochet Networks, now a wholly owned subsidiary of Aerie Networks, re-launched its mobile wireless service in Denver, Colorado. The company has announced plans to launch in San Diego, California within the next few months, and to arrive in other U.S. cities soon after.

Ricochet’s proprietary network uses 900 MHz unlicensed spectrum to connect its customers’ laptops and PDAs to radios placed on municipal utility poles throughout a service area: those pole top radios are then connected to wired Internet access points using 2.4 GHz unlicensed spectrum. In both cases, frequency-hopping spread spectrum (FHSS) technology ensures security.

Secure high-speed wireless Internet access that’s available throughout an entire city might sound like an extremely attractive offering—but that also describes the Ricochet service under Metricom. To make sure that it succeeds where Metricom failed, Aerie Networks is doing a lot of things differently from its predecessor.

A Whole New Look

Emilie Kelly, Ricochet’s Vice President of Marketing and Corporate Communications, says Metricom’s most obvious mistake was that it was priced too high: at $79.95 a month, it attracted a limited user base of affluent mobile professionals. Now lowered to $44.95 a month, the service is aimed at a much wider range of users, and is even priced to compete with wired access services such as DSL or cable.

Metricom’s Ricochet service, Kelly says, was also just too hard for consumers to find. “You couldn’t buy it on their web site, which was illogical because it’s an Internet product,” she said. “And they didn’t do any sort of Ricochet-branded packaging: even if they had it in a store, it was sold under the name Novatel or Sierra. We’ve done a lot to re-price, re-brand, and re-position it with a whole new look and feel.”

A Ricochet subscription, along with a $99.95 modem or PC card, can now be purchased online at the company’s web site, or through a dozen or so Denver-area retailers like Car Toys and CCI Wireless. A new bright orange logo makes the service and its equipment immediately identifiable.

Another significant problem for Metricom, Kelly says, was the fact that the company built its network out too fast in order to launch Ricochet as a nationwide service from the start. By the time the service was up and running, it was too late to attract the number of users they needed to stave off debt. “They were too anxious to build the network out ubiquitously,” Kelly said.

Instead, Aerie Networks plans to expand gradually, one city at a time, and is working to establish a wide range of partnerships to share the cost of building out the network. “We’re going into each city creating public-private partnerships with the owners of the pole tops,” Kelly said. “We’re either swapping the service or creating some sort of deferred lease payment structure where we get that space for free.”

A Public Service

Municipal services, including police and fire departments, are a significant new focus for Ricochet. They’re a logical customer base for the service, which was first developed in 1985 as a remote meter reading technology. There’s a more recent precedent as well: last October, the network was turned on at the World Trade Center site to provide wireless access for emergency workers.

For public safety personnel who are currently using CDPD service with speeds of up to 19.2 Kbps, Ricochet’s 176 Kbps service can be an attractive upgrade. “The police can use it for mug shots and prior arrest records,” Kelly said. “The fire department can look up building plans, weather, and disaster preparedness. Emergency medical can access medical records. There’s a whole laundry list of uses.”

Dan Jarvis, Chief Information Officer for the City of Denver, says Ricochet allows workers to do things on the move that would previously have been impossible. “Cities provide a lot of public safety services,” he said. “We put out fires, we rescue people: we’re at your house or on your street. With Ricochet, we can access data and submit reports we wouldn’t otherwise be able to do, quickly and securely.”

Zelos Group analyst Seamus McAteer suggests that partnerships with municipalities will also be a great asset in getting the approval that Ricochet needs in order to put its radios on utility poles citywide. “This will give them the political friends they need to overcome the bureaucratic bottlenecks that could otherwise stymie rollout,” McAteer said.

Ricochet is also looking for a number of other partners, particularly service providers, with whom to share the costs of launching in a new city. “We are very interested, in each market, in getting a large Internet Service Provider as a partner, because they typically have a large dialup base of customer that we can cross-sell to,” Kelly said.

The Right Niche

In each market, though, there’s a lot of potential competition. Carriers are starting to deploy 2.5G wireless data networks. DSL and cable are everywhere. And as Infonetics analyst Jon Cordova observes, the popularity of wireless hotspots makes Ricochet’s job much harder. “What’s changed since Metricom launched is that we can now find Wi-Fi networks in hotels and airports,” he said.

The challenge, Zelos Group’s McAteer says, will be to find a niche among such potential competitors. “On one level, they’re saying they offer broadband access: well, there are better broadband solutions,” he said. “On another level, they’re saying they offer mobile access: there’s potentially solutions out there that support broader mobile coverage. So they really will have to nail it in terms of positioning.”

Still, Kelly points out that the service is much faster than any 2.5G service currently available in the U.S. And she says the idea is not necessarily to compete with cable and DSL, but to provide access in areas where wired broadband access isn’t available. “Markets like Denver have really spotty DSL service,” Kelly said. “We provide a great fill-in strategy.”

While Ricochet offers a degree of mobility that wireless hotspots can’t provide, Kelly says that Ricochet plans to work in concert with hotspot providers. In December, the company will release its Ricochet Broadband Gateway, a unit that turns a Ricochet modem into a Wi-Fi access point. Future plans, she says, include a hybrid wireless modem that works on both Ricochet and Wi-Fi networks.

And Yankee Group analyst Sarah Kim notes that not all competition is bad. “The public wireless LAN space is taking off, which lends itself positively to them,” she said. “It was hard for one little company to try to revolutionize the wireless data experience. The fact that there’s so much noise now surrounding wireless data access in general will go a long way in helping them out.”

In the meantime, Kim says, the best that Ricochet can do will be to beat others to the punch. “Other high bandwidth networks are coming, but if you’re not in a major city, it’s going to take longer to get there,” she said. “The carriers certainly have priorities as to where they’re launching, and anywhere there’s spotty coverage, these guys are in line to benefit highly.”

Jeff Goldman is a freelance writer covering a wide range of topics for a number of online journals. He currently writes regular articles for Internet.com's ISP-Planet. Brought up in Belgium, Jeff spent the last decade in New York, Chicago and London; he now lives in Los Angeles.