Beholden to no one

The Wi-Fi community has been working overtime lately to distance itself from the failure of Wi-Fi wholesaler Cometa Networks. The summation of their allegations and analysis of the company's shutdown has been that Cometa was done in by poor management, rather than a poor business model.

This is the kind of thing that companies usually say when one of their much-heralded brethren fall, just to keep the rest of the market from panicking, but in this case it appears to be a pretty accurate judgment.

According to several sources that had business dealings with the company, Cometa was insistent about its plans to build 20,000 Wi-Fi hot spots to create metro-like Wi-Fi coverage in major markets, even though much evidence existed that the plan wouldn't be economically feasible for those types of markets. There also have been allegations that Cometa had an organization-wide superiority complex from day one, insisting that some potential partners pay high premiums to take advantage of the Cometa network even though Cometa reportedly operated less than 100 hot spots at the time of its demise. Other potential partners, deemed too insignificant, were turned away altogether.

Several sources have said that Cometa was nothing more than a facade for the three industry giants--Intel, AT&T and IBM--that pooled investments to start the firm. At least one of these giants reportedly insisted on approving many of Cometa's marketing and public relations decisions. In the end these companies abandoned Cometa, and it was forced to look for funding elsewhere--funding that it never received.

If all of this is true, then Cometa really wasn't made for the Wi-Fi business at all. It's a market driven by nimble wholesalers willing to change their business models as the market changes, and by hot spot venue owners who have no interest or reason to pay tribute to telecom giants. Cometa might have thought a young market would be beholden to its grand plans, but what the company didn't realize in time was that Cometa itself was beholden to an ecosystem that had already established its own rules for survival.

E-mail me at doshea@primediabusiness.com.