news.cnet.com/news/0-1004-200-6442868.html?tag=tp_pr -> news.com.com/2100-1033-269362.html?legacy=cnet&tag=tp_pr
The company's troubles mirror the woes in the wireless industry. Although wireless Internet access was hyped as a major growth area just a year ago, consumers have shown little demand for such services. Metricom is considered a trailblazer in the industry, having signed up well-known investors such as Microsoft co-founder Paul Allen. Despite such backing, it has been pounded by modest demand and the high cost of introducing its service. Alan Reiter, head of Wireless and Mobile Computing, a consulting company, said the bankruptcy shouldn't be taken as a death knell for the wireless industry. Metricom wasn't very representative of the wireless industry, offering a wireless service to access just data, like the Internet, for $75 a month. But the industry analyst said that subscriptions to cellular service--the old-fashioned cell phone capable of just making a voice call--continues to grow. He also pointed out that even though Metricom couldn't attract a lot of customers, it didn't lose the ones it had, he said. But the problem is it costs a billion dollars to create a nationwide network," Reiter said. Many people in the wireless industry wanted Metricom to succeed. Sprint, meanwhile, said earlier this year that of its 1 million wireless Web subscribers, only half were paying a monthly fee. The other half were using the service free as part of a trial offer or were considered "casual" consumers who paid for infrequent access. Metricom's problems became so acute that in May it 28 announced the need for $500 million in cash to keep operating. Metricom spokeswoman Nicole Russell said the company intends to keep the wireless Internet service up and running for the time being. The company said there were 40,900 wireless subscribers at the end of the last quarter. Under Chapter 11, a company can continue to operate while restructuring its debt. According to the filing, Metricom has about $900 million in assets but more than $1 billion in claims from more than 5,000 creditors. Metricom is the company that offers the Ricochet wireless service, which is available in 13 cities in the United States. The modem itself, which powers the service and plugs onto handhelds or laptops, is manufactured by Sierra Wireless. Resellers of the service include Earthlink, Compaq Computer, Worldcom and Juno Online Services. Most of the resellers offer the service for between $70 and $80 per month. The spokeswoman would not divulge just how much the company owes. In April, Metricom said it suffered a net loss of $186 million for the first quarter compared to a loss of $32 million for the same quarter last year. Since its inception, the company has accepted nearly $500 million in investments, Russell said. The company's technology originally was developed to allow utility companies to automatically read consumers' gas and electric meters. But when the Internet became a commercial success in the mid-1990s, Metricom refocused its efforts on providing wireless access. Ricochet allowed customers to use their laptops to access Net-based services as if they they were at work or home. WorldCom and Allen's Vulcan Ventures 31 increased their investments in the firm about the same time, helping to spark an increase in share price. Last year, the company embarked on a plan to offer the 128 32 kbps (kilobits per second) service in several additional cities. However, because of steep a decline in Metricom shares and tepid demand from consumers, Metricom was forced to scale back those plans and to 33 lay off workers. When the company reported its fourth-quarter results, it warned that it would have enough cash to last through June. That sparked an exodus by several of Metricom's top executives and a further decline in its shares. A later regulatory filing indicated Metricom might continue to operate through August. The bankruptcy filing marks the latest in a string of bad news for the wireless industry. Already, some carriers have delayed their third-generation wireless networks, which are expected to allow high-speed Internet access to mobile phones. For example: Japan Telecom announced March 7 that it was delaying the launch of its 3G network. Nokia said on April 3 that it was working to fix a software glitch that could have affected up to 10 percent of all cell phones sold in the United States. NTT DoCoMo announced April 24 that it would delay the introduction of its 3G service for four months. NTT DoCoMo announced June 12 that it was replacing defective Sony handsets because of a software glitch. In addition, many new mobile phones are growing increasingly complex, reducing the need for wireless Net access via laptop. The money represents the entire amount Metricom owes Wireless Facilities, which plans and builds wireless networks, the company said in a statement. Related stories * 34 Metricom sheds 23 percent of staff June 26, 2001 * 35 Palm slashes price on wireless handheld May 11, 2001 * 36 Can Metricom ricochet?
|
http://csua.com/feed/