Is Metricom's failure a bad omen for 3G?

Metricom, which strived to be a wireless high-speed Internet provider, yesterday announced plans to shut down its Richocet network next week. Some analysts believe the company’s failure could serve as a lesson for third-generation mobile service providers to focus on voice.

“It is a bad omen for 3G, because this is the first stab at mobile broadband Internet services,” said Jeff Moore, senior analyst at Current Analysis. “Fundamentally, Internet services are more of a fixed application.

“Mobile is ideally suited for voice. I think the Internet, apart from text applications, is something that is more desirable to do at home or work, not on the road.”

Although Metricom’s business plan failed, wireless carriers will have an advantage when rolling out 3G services: they already have the necessary towers, distribution channels and the brand name recognition Metricom lacked, Moore said.

Metricom, which filed for bankruptcy protection last month, has turned off all 15 of its markets and has lay off 282 employees. An auction of the company’s assets is scheduled for later this month.

”Metricom suffered the same fallacy a great number of other CLECs suffered: if we build it they will come,” Moore said. “The company believed enough customers would come onto the network and make it a profitable venture. It also presumed that large amounts of capital would be available for a very long period of time.”

Metricom also suffered with marketing and did not successfully convey what the product did, said Moore, who does not anticipate that Metricom will find a buyer for its network. “The operation had so many major problems and the odds that someone will buy it and continue using the network are quite low,” he said. “I don’t believe WorldCom will come riding to the rescue.”