By Wes Simonds
September 07, 2004
The new owner of the beleaguered wireless service say it’s looking forward to becoming a wireless ISP for the first time, supposedly sans worries about fighting the hotspot market.
It’s the fourth time that’s the charm, right?
That’s what Falls Church, Va.-based Terabeam Wireless (formerly YDI Wireless, AKA Young Design) is hoping with its recent acquisition of Ricochet, among the oldest and best-known metropolitan-area wireless services. The aptly-named Ricochet has bounced from owner to owner, averaging one new owner per year in the last three years.
Originated by Metricom as a mobile data solution for executives on the go, the service subsequently made its way, following Metricom’s bankruptcy, into the hands of Denver-based Aerie Networks. Aerie tried unsuccessfully to build a profitable business around it, but eventually sold Ricochet less than a year ago to EDL Holdings for an amount in the low seven figures. The June 2004 Ricochet sale from EDL to YDI similarly involved three million in cash, over forty thousand shares of YDI common stock, and an unsecured note for $300,000.
That would seem a pretty hefty price tag for a solution that’s led such a checkered past. To put it charitably, Ricochet is a brand as often associated by industry analysts with the Silicon Valley heyday of the last decade as a viable business opportunity in the current decade.
Still, YDI vice president of Sales and Marketing Brad Lester sees Ricochet not as a problem child but as a potent newcomer to the YDI stable of products and services.
“It’s true Ricochet is essentially a WISP [wireless Internet Service Provider], whereas we are a manufacturer of wireless products and components, in the unlicensed and extended range niche,” said Lester. “But we do more than just the standard Wi-Fi… Ricochet was originally designed for the unlicensed spectrum and while we have not been a service provider in the past, this hits our unlicensed sweet spot.”
YDI’s immediate plans are to continue offering Ricochet in the Denver and San Diego markets, where it’s been operating since the Aerie days, via essentially the same model adopted by past Ricochet owners. The traditional Ricochet technology, revolving around a 900 Mhz spectrum broadcast, offers better-than-ISDN-class throughput and requires a dedicated Ricochet-only modem. The modem comes free for customers in return for monthly rates of $24.99 (more to get extras like Web mail, hosting space, and dial-up for backup and travel purposes).
Many wireless pundits anticipate technologies built atop open standards such as 802.11 and 802.16 will form the core of successful solutions in the broadband wireless market arena. Lester sees the proprietary nature of the Ricochet solution as a strength in some respects, however.
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“Ricochet’s 900 Mhz gives you unbelievable penetration because it’s not as susceptible to non-line-of-sight issues, it requires fewer base stations per square mile, and is in short a great platform for a mobile network. Ricochet was designed for roaming from the beginning. Wi-Fi wasn’t. Ricochet is a proven technology with an established user base — even a cult user base,” he said.
“You’re not going to do voice over IP, but we don’t really see that as an issue,” he went on. “Our Ricochet customers want to focus on data. Those folks are happy with performance levels that get you four to five times dialup.”
The comparison to Wi-Fi is an intriguing one. Ricochet was conceived at a time when it had few, if any, serious competitors as a mobile broadband solution, but today there are a number of alternatives. Even low-end 802.11b, originally offering a mere three-hundred-foot broadcast range, has increasingly been interpreted as a metropolitan-area solution. Cities such as Cerritos, Calif., are now offering Wi-Fi-based “clouds” which cover multiple square miles.
How does YDI see the collision of Ricochet’s strengths and Wi-Fi’s increasing versatility and ubiquity?
“We see [Ricochet] as better oriented for roaming, more scaleable and inherently more secure because of its proprietary nature… far more secure than Wi-Fi. But we’re not trying to compete against Wi-Fi and traditional WLAN equipment; we offer that as well. In Ricochet, we see ourselves as offering a different layer of data delivery that complements Wi-Fi. Ricochet is a proven solution in large metro environments. Wi-Fi, to date, isn’t.”
Ricochet’s star-crossed history might trouble some analysts examining the deal, but Lester perceives that history more as a function of past management issues and less as a consequence of Ricochet’s technological shortcomings.
“[Metricom] were spending money like drunken sailors. We’re bringing fiscal responsibility to the game. When Metricom went bankrupt, their technology infrastructure was left in place. Some cities have begun to remove it, but not all, and we’re trying to work with various cities to tap that structure and reactivate it where it makes good business sense. There are some cities that may be difficult to work with or where it’s economically not feasible. We’re not going to tackle those.”
Lester additionally sees new opportunities for Ricochet, untapped by previous owners. “In addition to historical target markets we are exploring areas such as emergency response and homeland defense, where we feel Ricochet has something to offer,” he said.
YDI’s future plans for Ricochet also include an unspecified upgrade in performance. “We have a technology roadmap that will take us to what we call Ricochet Broadband, but for now we’re offering the traditional Ricochet from a technological standpoint.”