Moving pictures

If Metricom has its way, the operator will become the No. 1 provider of coast-to-coast, wireless high-speed data. But the nation will have to wait a few years first

Everyone is talking about wireless data. At PCS '99 in New Orleans this past September, people either speculated about where it is going in the future or discussed how they are working with it today. It is the cause of much industry excitement. However, the industry also is aware that something is missing: Consumers must be educated about wireless data's potential. Some say this is the main reason wireless data's progression has stalled.

When it comes to gaining national success in any industry, staking a claim to as many markets as possible can elevate a company's success. This involves speed. But unlike the data rates it plans to offer, wireless operator Metricom has moved rather slowly in rolling out its high-speed wireless data network.

Though Metricom's CEO Tim Dreisbach says "the public's need for access is growing rapidly and it is different than it was three years ago," the company will not complete its national high-speed mobile data service rollout until 2003 - more than three years from now. The entire industry could become unrecognizable by then.

But Dreisbach feels secure in his company's goal because, as of now, no one has come close to reaching the 128 kb/s data rates Metricom will offer, he says. Even though the company already has achieved data rates of 28 kb/s, it did not want to move across the nation until it could ensure the fastest rates possible. To go national, it also had to go cash hunting. With help from MCI WorldCom and Microsoft co-founder Paul Allen, the company has quickened its pace, securing cash and an infrastructure to handle high data rates.

Despite criticism regarding its lack of coverage - it has had presence in only four markets for more than three years - Metricom is serious about serving up mobile data fast and furiously. The country might have to be patient for a few more years; however, Metricom is well on its way.

Road across the nation

The fact that Metricom has not grabbed more markets has created some skepticism about the company's approach. Metricom currently offers its Ricochet service at 28 kb/s data rates in four markets: the San Francisco Bay area; Seattle; Washington, D.C.; and parts of New York. In addition, it serves corporate campuses and gate areas at some U.S. airports.

But Metricom has taken a gradual approach for a reason. The company has waited until it achieved a faster network at 128 kb/s; this way, it would not have to rebuild in more than four markets. Once it rolls out the 128 kb/s Richochet II service in its 50 targeted cities, Metricom plans to upgrade the existing slower-speed systems to that of the new network.

With a relatively new executive team - Dreisbach has been leading the company for little more than a year - Metricom can go forth with a refreshing outlook in its goal of covering the nation with high-speed wireless data service. The current Ricochet data system provides access to the Internet, private intranets, LANs, e-mail and other online services. It operates in the 900 MHz frequency band and consists of pole-top radios, which usually are fixed on street lamp poles and can only listen or talk, not both.

Ricochet II, on the other hand, will offer an increased data rate of 128 kb/s and will enable listen and talk functions to occur simultaneously (Figure 1). Another distinguishing feature of the coming service is that the company will charge a flat rate. Users will pay $29.95 per month for unlimited use without roaming charges.

The company currently has 29,000 subscribers, mostly concentrated in San Francisco, Seattle, and Washington, D.C. John Wernke, vice president of sales for Metricom, says about two-thirds of the company's business was the result of good old-fashioned word-of-mouth. "It is a hot space with pent-up demand," he says.

Originally, the company's goal was to infiltrate 14 cities, which involved dealing with 1300 municipalities that had to either approveor deny access to local lamp poles. So far, Metricom has gained rights of way in 12 cities. Wernke hopes the company will have presence in more than 40 cities by the first quarter of 2001, which would equate to roughly 100 million potential consumers, he said.

By June 2000, the company anticipates being in 12 markets and by the end of 2000, it plans to be in 21. "There are cities that do not make sense. Ricochet is good in high-volume, high-density areas," Wernke says. "To build in 12 cities is difficult, and it is a challenge. It is at the same level as building out PCS."

The most difficult task involved in the buildout has been "dealing with the people who sell bulk destinations at which to put the antennas," says Mike Ritter, chief technology officer for Metricom. Putting up the equipment on the pole tops is a cinch, he adds. For example, the company finished Los Angeles in a couple of weeks.

As for achieving the increased data rate of 128 kb/s nationwide, Ritter foresees the company gaining recognition for having a much more attractive data offering. "At the current speeds [of up to 28 kb/s], we can provide wireless data, [but] it is not an appealing offer," he says. "The new performance and coverage with the [128 kb/s] product will be way more appealing and better than a phone modem."

Behind the scenes

As with any nationwide service rollout, information regarding how a company plans to secure funding often becomes news - especially when it involves MCI WorldCom and Paul Allen's Vulcan Ventures. Together, the companies invested $600 million to fund Metricom's Ricochet rollout.

With MCI WorldCom's manic movement toward gaining a foothold into anything wireless or data related, the investment was not much of a shock. However, it inspired speculation of a potential merger between the companies. That speculation may die, though, with MCI WorldCom's recent planned acquisition of Sprint, which includes a nationwide PCS network that will be upgraded in a few years to carry high data rates. Although Dreisbach admits there is always a chance that MCI WorldCom could decide to seek full ownership of Metricom, he does not foresee this happening any time soon.

As part of the nonexclusive wholesale agreement it signed with Metricom for its Ricochet services, MCI WorldCom will be responsible for determining the retail cost of the service, which will be less than $100 per month, Wernke estimates.

MCI WorldCom's considerable investment in Metricom is a sign that the company is headed in the right direction. "[MCI WorldCom's] interest is a validation of the technology [because the company] very much understands the marketplace," Dreisbach says.

The Metricom investment is another example of the company's commitment to wireless data, according to a spokeswoman for MCI WorldCom. In addition, MCI WorldCom will be a provider of the product. "It is another alternative to provide access to our customers," she says. The company would not comment about future plans.

As to what Paul Allen's interest is, most might chalk it up to big business as usual. Whatever the reason, Metricom certainly has benefited from the cash infusions from both companies.

But will it be fast enough?

With competition heating up and carriers scrambling toward more value-adds, companies that want to make a mark in the wireless data space must sprint to the finish line. Although its pace may have seemed like more of a jog than a sprint, Metricom is firm about meeting its 2003 rollout time frame. The company also is convinced that its service will be faster than other services available to mobile professionals.

Metricom believes business professionals' reliance on fast Internet access will be the catalyst that propels the company forward. "We are driven by the user's need for information and for Internet access. They don't care if it is wireline or wireless," Dreisbach says. "We are the extension of the paradigm for information access."

Ritter agrees. "We are convinced that the market will grow because we see a lot of demand coming from the mobile professional."

Others are more critical of Metricom's pace. "The good news is that it is difficult to find current subscribers that do not like the service," says Bob Egan, research director of networking with the GartnerGroup. "The bad news is the company has not had a clue on how to stay focused and execute to get more availability to the mass market."

Gaining a national footprint in the fledgling wireless data sector certainly will be an accomplishment. For the sake of successfully completing its rollout plan, the pace Metricom set in Los Angeles hopefully will be duplicated across the country. For an industry that can transform itself almost over night, 2003 may seem like a far off reality.

Egan intimates, however, that Metricom has an advantage - the ability to offer 128 kb/s data rates. In addition, for any company competing in the wireless data space, having good in-building coverage also is going to be key to success, which is an additional advantage that differentiates Metricom, he says.

"They have demonstrated the ability to raise money. Now they have to demonstrate the ability to build a wireless data network," Egan says. "It is all about execution and how to make service available."

Becoming known for a unique offering also involves not wasting time. While the industry grapples with the viability and potential demand for wireless data, players may have some time to strategize. But they do not have long.