DENVER-Ricochet Networks Inc. may have a new lease on life following its sale to EDL Holdings Inc., a Victor Mitchell Family L.P. company. The transaction follows last month’s announcement Ricochet was evaluating options relative to its business prospects, and rumors its networks were experiencing intermittent blackouts and most of its staff had been fired.
Ricochet’s first goal under its new ownership is to complete its footprint in Denver and San Diego, where its network is currently active. When finished, plans call for Ricochet’s Denver network to stretch from Castle Rock, Colo., to Boulder, Colo., and its San Diego network to extend from Oceanside, Calif., to the Mexican border. The expansion will take 90 to 120 days to complete, according to Greg Sadler, Ricochet’s former CEO, who will stay on with the company as chief operating officer.
The company then plans to roll out new pricing plans to make the service more competitive with other broadband alternatives. Ricochet service today costs $45 per month for unlimited service, and its modems sell for $100.
The company also plans to ramp up advertising and to secure more channel partners, including retailers and shopping-mall kiosks, to bring more attention to the Ricochet product. Ricochet is seeking to hire 30 employees in Denver, including the re-hire of certain workers laid off under the company’s previous ownership.
Ricochet service, which operates in the 902-928 MHz and 2.4 GHz unlicensed frequency bands, allows users to wirelessly connect to the Internet at speeds of up to 176 kilobits per second. It is powered by pole-top radios spread across power grids within cities.
With the transaction, EDL Holdings becomes Ricochet’s third owner. Ricochet was originally owned by Metricom Inc., which deployed the network in 17 markets across the United States. Under Metricom, Ricochet service was targeted at the “traveling business man,” hence the need for widespread deployment, said Sadler. But even while charging $80 per customer, Metricom was unable to meet the cost burden of the network and filed for bankruptcy with a debt load of more than $1 billion in 2001, less than a year after launching the network.
Aerie Networks Inc. acquired Ricochet from Metricom in 2002 for $8.25 million. Although it re-activated the network in Denver and San Diego, it never fulfilled its original business plan to re-activate all 17 networks.
Again, once the network expansions in Denver and San Diego are complete and the new pricing scheme is in place, EDL plans to re-activate the network in the other cities Ricochet has served. According to Sadler, the network is already built in 19 metro areas, requiring the company to negotiate agreements with the cities hosting the equipment to allow Ricochet to access and recover the assets.
Under Aerie, Ricochet’s focus shifted to the consumer market, but “we knew we needed a consumer marketing expert,” to properly market the product, Sadler said, adding that Victor Mitchell, head of EDL Holdings, who will serve as Ricochet’s CEO, brings just that to the company.
Mitchell also is CEO of wireless distributor Advantage Wireless, based in Centennial, Colo. Mitchell founded Advantage Wireless in 1989 in San Diego, and moved the business to Colorado in 1996. Today, there are more than 100 Advantage Wireless licensee and company-owned retail stores, according to the Advantage Wireless Web site.
Advantage Wireless received the “Colorado Business of the Year” award for 2000 from the Denver Chamber of Commerce and U.S. West, and the Denver Business Journal named Mitchell as one of its “top 40 under 40” business executives in Colorado, according to the Web site.
