NEW YORK-Metricom Inc. is on track to launch its new Ricochet service with data speeds up to 128 kilobits per second in New York and several other cities markets by the end of September, Timothy A. Dreisbach, chairman and chief executive officer, said.
Positioning itself as both a mobile and fixed wireless data carrier, Metricom rolled out the next-generation Ricochet service in Atlanta and San Diego this summer. By early next year, the Los Gatos, Calif.-based company expects it to be available in a total of 21 cities. These include Baltimore, Boston, Chicago, Dallas, Detroit, Houston, Kansas City, Mo., Los Angeles, Miami, Minneapolis, Philadelphia, Phoenix, San Francisco, Seattle and Washington, D.C.
“These are big footprints that include outlying cities and suburbs,” Dreisbach said in a presentation recently at the Lehman Brothers Inc. “Wireless Internet Conference.”
The carrier, which uses unlicensed 900 MHz spectrum, has rights-of-way covering 63 million people so far. It is in the process of obtaining rights-of-way in an additional 25 domestic markets in order to cover a total of 100 million.
“One problem with the assumption everyone is making about all the new applications coming for mobile users is that some carrier will be able to take all of the information from the antennas back to the Internet. The wireline Internet is not built on a phone line. It has a data backbone. LANs(Local Area Networks) don’t use a PBX (Private Branch Exchange). They use Ethernet LANs,” Dreisbach said.
“The same will be true in the wireless space. You need a network with the capacity to handle all the data applications. Ricochet is the only one with that capacity. I know that’s a pretty bold statement.”
Taking aim at “all this 3G stuff,” Dreisbach said the macrocell networks many wireless carriers plan to deploy require multiple users to share bandwidth, the capacity to move bits of data. Sharing will subtract from ideal speeds of 144 kpbs.
Metricom also shares the unlicensed spectrum it uses with other kinds of carriers. However, it has obtained 30 patents in its 15-year operating history governing spectrum sharing and the prevention of encroachment by others, Dreisbach said.
“Our data network is one of these 3G approaches, but it is designed around many microcells, so we can reuse spectrum in different cells for different users,” he said.
The “theoretical range” of each microcell radio is 20-30 miles, “but we are putting them close together to get in-building penetration and blanket coverage,” Dreisbach added.
On average, Metricom is installing five or six microcells per square mile, except in very densely built and populated areas like New York, where it has put in 50-60 per square mile.
Given today’s prices of $1,700 for each microcell and the imminent price decline of several hundred dollars, the next-generation Ricochet network covering the 21 top-tier metropolitan areas will cost about $1 billion. Metricom has the capital on hand for this buildout, which will support 3 million to 4 million subscribers, Dreisbach said.
John M. Bensche, managing director and senior wireless service analyst for Lehman Brothers, estimated that Metricom could reach cash flow breakeven status when it has 1.5 million to 2 million subscribers. Dreisbach said the company would not project when it expected to go cash flow positive and that it would release subscriber numbers with its third-quarter earnings report.
Besides the 50 million “knowledge workers” who spend at least one work day weekly outside their offices, Metricom also sees fixed wireless data access for residential users as “a tactical opportunity,” the chief executive said.
“Cable (television) shares spectrum and slows down when many people are using it,” he said.
“DSL (digital subscriber line) doesn’t slow down, but 85 percent of those who want it can’t get it. It’s not just because it’s out of range but because there already are too many splices in the lines to maintain good quality.”
The new Ricochet service is designed to deliver 500 kilobytes of bandwidth capacity to each customer per month and is priced at a flat rate of $80 wherever in Metricom’s territory the service is used. The carrier splits the revenues 50: 50 or 60: 40 with its channel partners, which include MCI WorldCom, one of its equity investors, Juno Online Services, Wireless WebConnect! and UUNEt, also a supplier of backhaul services to Metricom.
“A 3,000-minute bucket plan from Sprint costs $400. Wireless price plans generally deliver only a few hundred kilobytes per month, after which the systems are too slow for customers to use the rest,” Dreisbach said.
“It costs $2 per minute to use your laptop in an airport kiosk.”
Richochet customers must buy their own handheld devices, including air card modems, which have antennas.
“Novatel Wireless and Sierra Wireless have PC air card modems at higher speeds in late stage development,” Dreisbach said.
“We also have a strategic partnership with National Semiconductor, which is working with us to shrink the wireless air card modem into a chip.”
