Metricom's stumble raises 3G questions

With Metricom's demise, so failed North America's first stab at mobile high-speed services. But as Metricom shut down its Ricochet network last week, customers insisted there is still hope for high-speed wireless data services in the U.S.

“Metricom has suffered from the same fallacy a great number of other CLECs suffered: If we build it they will come,” said Jeff Moore, senior analyst at Current Analysis. “They presumed large amounts of capital would be available for a very long period of time. Maybe if they had taken a more incremental approach they would have survived.

Moore said Metricom's failure is a bad omen for third generation wireless and most likely an indication the technology is overhyped. But major carriers deploying the next wave of high speed wireless services will have inherent advantages, including size, marketing muscle and sheer amounts of cash to deploy nationwide networks and keep them running while the technology proves itself, Moore said.

GoAmerica, one of Metricom's primary resellers, believes in 3G, despite its limited success in promoting Ricochet among its multi-technology data offerings. After launching GoAmerica over the Ricochet network in late 2000, the company moved more than 5% of its customer base to the 128 kb/s network.

“There is a demand for this kind of service,” GoAmerica President Joe Korb said. “We learned a lot about what customers are looking for with Ricochet. They want convenience. They want wireless to make their lives easier. More and more we're seeing wireless replicating the desktop. People really want that ease.”

Any customer enthusiasm for the higher data rates may be stymied by their service suddenly disappearing with no clear replacement ready to take its place. With Metricom gone, the fastest data rates running on a wireless network is 14.4 kb/s. Faster rates won't be available until the end of this year at least when the first cdma2000 1XRTT and general packet radio service networks come online.

Korb said GoAmerica has managed to transition most of its customers to lower-speed services in the interim, but other customers didn't have that option. WorldCom, Metricom's largest reseller and its second largest investor is in more of a bind.

“We are working with our customers diligently to minimize the inconvenience, but we don't yet have a direct replacement,” a WorldCom spokeswoman said.

WorldCom owns a 38% stake in Metricom, an ownership stake second only to Paul Allen's Vulcan Ventures, which owns 49%. WorldCom's $300 million investment in the company has led to speculation that the carrier will try to bail Metricom out of bankruptcy, but Moore isn't counting on it.

“The operation has so many major problems that the odds someone will buy it and continue using the network are quite low,” Moore said. “Don't think WorldCom will come riding to the rescue.
Kelly Carroll contributed to this report.