Walter Mossbacher of the Wall Street Journal called it the best thing since the beginning of time--or something like that. But those ads, arrrgh, those horr
ible, Euro-spastic, spy ads, where the technology gets buried amidst a pretentiously confusing montage of 60's polyester and fast cars. We're talking of cou
rse, of Ricochet.
As the rest of the wireless world throws its nose to the grindstone, hoping to churn out solutions that work wirelessly, Metricom has spent the last five ye
ars or so building a network to provide 128k service wirelessly. The carriers are the competition, but that doesn't phase Metricom, given how slow the big b
oys been so far. Having 28 patents and Paul Allen's backing doesn't hurt either. But don't Handspring and Palm pose a threat? John Wernke, Senior Vice Presi
dent of Metricom was kind enough to talk to us as he drove home through the beautiful California countryside.
A: I've got this commute that I do every day. It's about 30 miles and it generally takes about two hours.
Q: So you don't have to worry about the 70 mph limit on New York. That might be a problem in New York though, especially if you're in a taxi.
A: It's not that the service breaks at 70 mph. The quality is guaranteed at 28.8 or faster. A lot has to do with how the infrastructure is deployed a
nd how different pieces of the RF travel. If you travel in a straight line under each piece of the infrastructure, then the hand-offs become a burden. If yo
u work your way around the circumference of a cell, then the hand-off's aren't that burdensome. We have people in LA using it all the time at 128k going 80
mph, so it depends.
Q: Right, and that's while they're driving, talking on the phone and drinking a double skim latte.
A: True, you don't want to be anywhere near those guys. But we are very conservative in our specs. We talk about the end user speed, not the raw netw
ork speed. We would be in the 700 kbps range if we talked about our numbers in the same way other companies do.
Q: Where is the roll-out at this point. How far along are you towards the 100 million you were aiming for?
A: We have 14 markets launched, including Manhattan. There are 30 million people under the coverage umbrella. Our Q4 earnings call on February 8th wi
ll provide new numbers.
Q: What about the distribution partners, such as GoAmerica and Aether? How effective have they been?
A: GoAmerica, while we signed them-- The Ricochet network is a last mile wireless extension of someone else's network. That's a good way to think abo
ut it. By the time we got all of our connections done with GoAmerica, we were able to launch service the last two weeks of December. We're happy with our pr
ogress.
Aether, we have not reached a launch date with. We're still working out some of the technical issues on the equipment on the launch side.
Primarily, the folks that have been selling are Wireless Web Connect, Juno, and WorldCom.
Q: As an overall strategy, are you focusing on consumers directly or resellers? There seem to be three parts of the strategy: direct to consumer thro
ugh Ricochet, direct to consumer through WorldCom and Juno, direct to business through Aether. This seems confusing?
A: The confusion is that we are running a strict branding campaign to establish Ricochet as a high-speed brand. But the branding campaign without the
resellers providing an offer as to where to buy it appears to be confusing. We've re-crafted the campaign and will now run it with channel partners include
d. It's about 180 degrees from what we were doing last year.
Q: Ah, well, 15 million here, 15 million there. How much is the slowdown in PC growth going to hurt Ricochet?
A: There are a lot of people predicting the end of the PC era. Whatever device you want to talk about, PDA, or information appliance, all of the devi
ces have a need to access information. We're more mobile. We need to provide mobile solutions.
Q: Sure, but don't Palm and Handspring have their own solution that competes directly against what Ricochet offers?
A: Palm and Handspring have some services that provide a limited view, but not a complete view of the Internet. For example, the average user of Palm
.net is using about 150 kilobytes. The average Ricochet user is at 100 megabytes. That's a significant difference.
Q: But I'm not sure you answered my question. Your focus is on PC's.
A: That's incorrect. There are devices, like when we won best of show at Comdex, what Bill Gates was pulling up was a card slipped into the Compaq iPaq. There's been an announcement with Sony. We're not fully dependant on the PC market. Our bet is that any of them can win.
Our job is to build a low-cost network and continue to engineer chipsets so that he size of the communication hardware gets smaller and smaller.
Q: When will that happen?
A: We should have chipset prototypes in February and in the market by the middle of this year.
Q: Even with all the cash you guys have on hand and Paul Allen as a backer, you're still competing with the carriers and their 3G rollout. How much of a threat does that pose?
A: The good news about 2000 is that all 3G projections have been pushed out. You regularly hear 2005. There's been a truing up of the speed. 3G will provide a speed that at an end-user performance is 128, which is what we offer 80% of the time.
Q: So you're five years ahead of the carriers?
A: That's correct. But they are big carriers with lots of money and backing and we take their threats seriously. The capital markets have gone dry on all of us. Carriers need to spend billions to play in the 3G space. We sell them on 'all you have to do is raise your hand and you can be a Ricochet re-seller'. It's a wholesale model. They own the customer relationship--provide billing and customer support.
In a lot of cases you can't even get voice connectivity, and now you want to add data? We sell them on dual-mode strategy that a. let's sell Ricochet together and b. let's work on a combined offering so that when somebody is in a Ricochet area, their coverage is Ricochet and when they're out, they get cellular.
Q: What were the carriers doing while you guys were building your networks? Why didn't they do what you did?
A: Building networks on a national basis is expensive for anyone. If you already have an existing network, you keep running that network and look for incremental performance increases. What Ricochet does is use microcells. The ability to take our radio structure and re-use it. We put out our infrastructure at 5 per square mile. The average PCS deployment is one per 10 square miles.
Q: Why don't the carriers build more dense deployments?
A: That's cost-prohibitive in their design. We can do that because we use 28 patents in wireless back-haul. In order for someone to replicate what we're doing they'd have to build infrastructure and then t1's to each point.
Q: Of course, if I wanted, I could build what you guys have for my own personal use, and not be in violation of the patents as long as I didn't sell it.
A: I believe that's true.
Q: Well I gotta get to work. I can't afford Ricochet on a writer's salary.
