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MONDAY,SEPTEMBER 20, 1997 TILE WALL STREET JOURM\AL R19
<br /> f
<br /> AE��.O.M
<br /> THE BUSINESS
<br /> ..................................
<br /> IN THE ® ® ®
<br /> Metricom has been a big fish in the small pond of Wireless
<br /> Internet service firms. What happens as the pond gets bigger?
<br /> By DAVID P.HAMILTON wireless networks. Metricom's network z 1e. expensi•re proposition,even when each ra- gears from a technical focus to a market:
<br /> may deliver data faster than its eompeti• dio cost just under 2.000,far less than an ing focus."
<br /> tors, but it still limited geographically •-- u < s , ordinary cellular base station.As a result, Mr.Dreisbach's team decided that
<br /> Atetnrnm ha been a plop r in provrdrng wurSess Internet selvice,but Ice•sub
<br /> Is WIRELESS ly coming ACCESS I the Internet and Its subscriber base remains fairly ,cri, � r Metricom made the decision earl to limit addition to expanding their
<br />network nS
<br /> Is finally tom[ng of age In the U.S.,It small—only 29,000 customers as of the end �' base remeinv small(subaciliers in ttioi,und;)' ;,°',,;,; ::, s:, ? its coverage
<br />to a handful of cities a list tionuide p
<br /> .••._:•= qq the company needed to more it
<br /> may prove to be a mixed blessing for of June. Cellular providers, meanwhile, <bO ' 't that currentl•Includes only the San Fran
<br />' one of its pioneers,Afetrtcom Inc. have announced network-upgrade plans a ' t > Y gressively target highly mobile worker
<br /> P Cisco Bay area,Seattle and Washine on, the so-called road warriors who need wi-0
<br /> These should be the best of times that could deliver data•transmisslon s g; D.C. less access wherever they go.
<br /> for Metricom, a Los Gatos, Calif., speeds rivaling those of Metricom within a ?; ? Metricom launched the Ricochet ser• Indeed,that was also one reason to YC'
<br /> company with one of the first flat- few years." vice in September 1995,and for more than celerate the development of
<br /> Ricochet;wireless Into e t services I t he na• "Wireless carriers are eyeing In- a y ear ad ded roughly 3 CO I subscribers no w sl a:ed
<br />to begin service In m[d•200O(2i;
<br /> tion.While traditional
<br /> cellular carriers are ternet space with greed and envy,-says each quarter. By late 1997, however, 12 cities, Including New York, Dallas;
<br /> just starting to target the suddenly hot Darryl Sterling,an analyst with Yankee F, growth started to slow,because Metricom Chicago and Los Angeles.Atetricom
<br />p14Tgj
<br /> market for wireless data, Metricom al- Group,a market-research firm In Boston. ICi
<br /> had specifically aimed its service at college to expand service to io cities by the middle
<br /> ready has an established subscriber base. By next year,analysts say,most new 10 students and professionals who needed a of 2001.
<br /> Its own dedicated wireless data technol- cellular-phone handsets Ail[handle data. - # simple and inexpensive way to send e-mail The Investment by Mr.Allen and
<br />MCA
<br /> ogy,and a network that can handle data at at least to the extent of providing simple e- '? and surf the Web close to home.But college WorldCom not only ensures
<br />that Metricom
<br /> spends of up to 29.8 kilobits a second, mail and two-way paging capability.And Ys s students tended to cancel their service at has the funds to complete
<br />Ricochet 2,but
<br /> roughly twice as fast as those of Its nearest network upgrades should make it easier toJ- the end of every school year,and the local also offers the prospect of raising
<br />its na'
<br /> competitor. use cellular phones as wireless modems for ::0 engineers and salespeople that Metricom tionwide profile. MCI WorldCom, for In:
<br /> Even better, Metricom in June re• notebook computers. .,aQ •3a,.�:1Q ..;1Q.2Q'• hoped to reach never signed on In large stance,uiII distribute the Ricochet servic?
<br /> ceivM a sway million investment from AICI Mr.Dreisbach and other Metricom offi r X98 �: t94T ; y 1999 :1999 numbers. in a nonexclusive arrangement
<br />for five
<br /> tt'orldCom Inc.and Vulcan Ventures,an cia!s say they aren't worried about the com- SasaYrnCU,fn_ -
<br /> investment partnership headed b Mi•
<br /> petition.And anal st;generally agree tha! - ' - - r +_� That prompted same soul-searching years.
<br /> P P Y pe Y g y among company officials as capital started Mr.Allen,meanwhile.Is rumored td be
<br /> crosoft Corp.co-founder Paul Allen.That Metricom stands a good chance of estab- to run short.By September 1997,Metricom considering linking the Ricochet 2 netwot�
<br /> means Metricom finally has the support it lishing itself in the wireless world.its ser- decided to scale back its marketing of Ric- with his extensive cable-television
<br />hot
<br /> Q
<br /> peedi to build out Its even faster next-gen• vice,designed for use with a notebook or J• whet and to marshal its resources instead ings,possibly In order to provide
<br />cable-mon
<br /> eration network;andto market its service desktop personal computer,provides a con- 11 ireless carriers are eyel•ng the Internet or,the development of its next-generation
<br /> demusers withawireless"upstream-coii-
<br /> to road warriors across the U.S. tinuous,"always on"Internet connection, network. Ricochet 2,designed-to provide nection to the Internet that would'byplsS
<br /> "it's a great endorsement for us,'says in contrast to conventional dial-up service , data speeds of up to 129 kilobits per sec- local telephone companies.
<br /> Ale:ricomPresident Tim Dreisbach.-1i's a .that requires users to log in each time.Sub- space wah o'reed and erlily, says one a'nal1/st and—mach faster than Ricochet 1's
<br />28.8 ,fr. Dreisbach argues that Metricom
<br /> validation of the market and the way we're scribers seem generally happy,and while kilobits and roughly twice as fast as to- will be able to keep one step ahead of
<br />ceild`:
<br /> going to apply our technology to a nation- there still aren't many of them,Afetricom's day's Sc•kilobit modems. tar competitors,whose next speed upgrade
<br /> wide network." iconoclastic struggle to build its own dedi- Itv.Then Metricom officials hit upon the dio spectrum—one shared with garage- will take their network
<br />speeds only up to d
<br /> Holdin
<br /> e catedwirelessdatain frastructurecouldfi- idea of creating a high-speed data network door openers•baby monitors and similar Focus on Marketind kilobit;e the Lead
<br /> per second—and probably w•otl'r
<br /> nally pay big dividends once it lights up its with their radio technology—one they short-range radio devices. So in mid•1995. Metricom's board de- deliver speeds comparable
<br />to Ricochet?
<br /> As that market grows,however,the big next-generation network next year. would eventually name Ricochet because Meldcom could also design its network tided to bring in new
<br />managers,including until 200?or so.
<br /> question for Metricom Is whether It can of the way the system bounced transmis- specifically to handle data,allowin;it to Mr.Dreisbach,to revamp the company's
<br /> In addition, he says, Atetricom°li
<br /> stay ahead of tom etitors who have sud• The Rise of Ricochet
<br /> P sions from radio to radio. sidestep some of the technological compro- strategy. (Metricom's former president, serving a different market by offerin,
<br /> denly awakened to the emerging opportu- Metricom's unique path to wireless That approach held several advan• raises that cellular providers are wrestling Robert Dilworth,remains
<br />the company's high-speed wireless directly to PC users:
<br /> nitles In providing electronic mail, mes• data service is largely the consequence of a tages.Instead of buying the rights to ex- with in converting their systems to carry
<br /> chairman) "We had a lot of folks who cellular companies,by contrast,are MI
<br /> saging and even full Internet access across quirk of history.Until 1995,the company pensive chunks of radio spectrum the way data. were bright at developing the
<br />technology." likely to focus oh more limited wireless'
<br /> was primarily In the business of building traditional cellular providers have done. However,use of the low powered ra. says John Wernke,Metricom's sales and data services
<br />such as offerin
<br /> AlI.KUMILTON 1S A STAFF RPa&TEa Lv THE WALL short-range radio sets that beamed elec- Metricom designed its network to work in a dios meant that Atetricom had to install a
<br /> marketing chief,who joined the company quotes,maps and access to airlii
<br /> SrMC JOLT-SACS SA.•+Fhivctsco atxcvu tric•meter readings back to the local util• largely unregulated twilight zone of the ra- radio transceiver every mile or two—an
<br /> In August 1995. -But we needed to shift vation systems. E-
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