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Aerie Reviving Ricochet Network
lemmett writes: "It looks like Denver's Aerie Networks is stepping up to the plate and trying to make money with the Ricochet network. We'll see if their new business plan works any better than Metricom's did. From the article: 'Reducing both network and marketing costs and acquiring hundreds of millions of dollars in assets for a song means Aerie can offer cheaper service, which it plans to sell for $39 to $49 a month, according to Aaronson. If Metricom's strategy was to focus on high-end mobile users, Aerie's will be to provide commodity broadband to the many places DSL and cable modems don't tread.'"
Coming soon to an Iridium handset near you.
but when the previous guys went bust selling the same service for a higher price than you intend to retail at, this may not be the wisest move...
I hadn't realized that Richchet was $1B in debt. Paying the intereste on that probably ran to the tune of somewhere in the range of $5M-$8M/month, which with only 50K customers means that you'd have to grab $100/month/customer just to make interest payments. It's easy to imagine that getting rid of that cost of $100/mo./customer might leave a more profitable business.
I'm a nature photographer.
... makes a lot of sense. For example, where I live (Houston, TX), there are many, many neighborhoods that simply can't get either of the land-line based broadband options (well, ISDN I guess, but that sucks) for reasons like "lazy or stupid cable tv company" or "neighborhood has dsl-incompatible switch, so sorry", things like that. These are subdivisions that are hardly way-out-rural locations, and many of them are reasonably high income. In other words, they're close enough in that not much in the way of wireless infrastructure could reach most of them and they're eagerly waiting to put dollars in somebody's hand. (Most of my friends in this situation either rely on ISDN or sat modems, neither of which anyone has said many complementary things about either in terms of expense, bandwidth, or latency.) I imagine this is not an uncommon situation (I've heard of many other cities that suffer from these conditions, in places ranging from SoCal to NoVa). These folks would make a great bread-and-butter revenue stream, top that off with an icing of high-ticket mobile users and you've got a great initial revenue stream.
News for Geeks in Austin, TX
actually it does make sense.
the company that went bust did so because of the enormous cost of settin the network up in the first place. Theese guys now have the same network without the billion dollar debt associated with setting it up.
It seems to be a common trend now, whoever sets up a large network like this goes bankrupt and whoever comes in behind em and takes over the fiber can clean up.
But the sad fact is, there are not enough people willing to pay so much for wireless coverage which has relatively low access coverage.
The funny thing is, whowever build the infusturce (SP) will probably ending up bankrupt (which is exactly what is happening right now, omnisky just filed chpater 11), companies later on might very well benfient from those fallen companies.
I wish I can have affordable, high speed wireless access here in Canada. 20 years perhaps...
kawai
...before 3G is available in the US. I don't really care about Metricom or whatever if the service they offer is just as dull as it used to be. Just came back from Japan on a business trip. I was just amazed how many people are connected permanently overthere. I was hooked. I got one of these SONY models for the 2 weeks I was there. It's just plain amazing the feeling you get to carry this thing around all the time. Flip it open and anything I get at my desk right now is available in a small but very surprisingly readable screen. The interface for inputing chars is just not there. But most of the time, I was browsing with the mini joystick. When I took the plane back home I felt that I was returning to the middle age.
Where did the debt go? $1B doesn't appear from nowhere? Or does it? If it does, please tell me where. I'm poor
Not necessarily - if the previous guy went bust financing the build-out, which you then inherit for a song, then you are in a better position than they were
Also, by lowering the price point, they can sell more units. If you sell to three people for $40/month where the previous guys only sold to one person at $75/month, you're making more money. And the $30-$40 price point is the sweet spot for high-speed Internet access, as shown by cable.
Which leads to the real question - what's the bandwidth on this, and how does it scale as you add users? Since it's 7 nodes per square mile, presumably that's all the density you need to scale to, but I didn't catch the bandwidth in the article... it said 128 Kbps minimum, but didn't say what it scaled up to...
-Don
Take a look and feel free: http://www.PieMenu.com
Do you mean "who loses that money?" The people who lent Ricochet money in the first place--banks, perhaps equipment vendors.
$1B doesn't appear from nowhere?
If you're asking here where the debt came from, probably from the construction of the network, and from rent, advertising, setting up and running the service when there were even fewer customers than the 50K or so they had when they closed business ... that sort of thing.
I'm a nature photographer.
I'm not surprised to see something like this happen. It seemed there was all kinds of venture capital dollars in the 90's, some of it was bound to be put to something durable, like a network like this one.
A few people just had to take a bath on it. It wasn't a bad idea, it just couldn't work the first time around. At under $50 though, it should do really well.
I wonder if they're going to support the old modems?
My Karma was at 49, then they switched to words. All that work for nothing!
That said, the monthly $39-$49 cost is comparable to current options, yet the speed is only stated to be 128 kbps (though actual throughput may be higher). If potential customers have a choice between Ricochet and cable or DSL, most would choose one of the latter alternatives because of the speed.
While 128 kbps is certainly better than a modem, the real test of this company's future is whether it can provide service in markets which are not served by cable or DSL. Otherwise, I am not sure how large a market share it could garner.
Sig (appended to the end of comments you post, 120 chars)
Given that Aerie purchased Metricom's assets at such a low price, it certainly may be possible to make money in the short term -- the infrastructure costs to build out this type of network is unbelievable, and the debt from that sort of expansion undeniably is what killed Metricom.
;)
But the question is: what about expansion? They can't expand, because that would mean going back to Metricom's business model (and the commensurate debt). When people demand more coverage or the spectrum becomes saturared, the answer's going to have to be: hey, we got this network used, live with it -- since I doubt at $50/month they'll make enough for any major improvements. Even if they don't expand, and their customer base remains small enough to offer acceptable service, will Aerie make enough money to replace failing equipment or renegotiate leases on their antenna space?
The answer is: probably not. Unless wireless truly is as much of a "niche market" as the pundits say, it would be very, very easy for Aerie to get killed by any sort of success. It's a damned-if-you-do, damned-if-you-don't situation, since it's bad for Aerie if nobody signs up, and it's bad if lots of people sign up, too. Doesn't sound like any sort of long-term solution to me.
But I still wish it were in my neighborhood...
Eschatfische.
I can imagine a room of 30-50 wealth guys.
"Hey, we could make a bundle if we didn't have to pay to build the infrastructure!"
"Ok, instead of playing politics, let's all pool some money together, convince a bunch of investors it will work, get 10x the money we put in, build it, then go broke, and take the loss as a write off."
"Great! Then we'll buy it out of Bankrupcty for less than we put in the first place! It's win-win!"
I demand a million helicopters and a DOLLAR!
I'll be honest, if they can provide support for me, at my home, and work, and maybe where my nearby 2600 group meets, i would get it even though I have cable. It's also nice to have an internet connection when one is waiting to be towed for four hours.... If its below 40 bucks, I would see it as worth it. Maybe faster access would be nice.
What I want to know is: when can I have my service back!?
-- @rjamestaylor on Ello
35 simultaneous connections at a minimum of 128kbps per antenna. Over 5,000 antennas in greater LA. (From the article)
-- @rjamestaylor on Ello
i wonder if how much longer until we start seeing a lot more of this kinda stuff.
Smart folks picking up the pieces for pennies on the dollar;
making a little money;
not trying to conquer the world,
using common sense with good service/good products.
That kinda kicks ass.
(pretend there's something witty here)
This is just what I need. I think Werie can really make a go of it. Now is a good opportunity for them.
1. ATT just gave everyone one more reason to hate them. Nobody like the cable companies. Would I trade speed for convenience? Yes, at the speeds they have.
2. DSL still isn't an option for me. I live on the peninsula south of SF, but distance and really bad line noise make DSL impractical.
3. Cost saving. By renogiating pole-costs for free service to cities, Aerie will save money; guarantee modem maunfacturers/distributors a steady market; and build mindshare.
4. Changed the image. City employees who like it (assuming the service is as good as it was) will be walking ads. They may get their own service off the clock. Also, their friends/neighbors may be convinced this is a good thing. Nothing like seeing a new option in operation to show people that it really works and they are not taking a risk. This is important to reach a broad popular base. It would also help to shake the stupid Austin Powers-esque / Mobile spy image in Metricom's old ads. Do you really need to surf the web as your sports car cruises the tarmac to your jet?
Essentially, the service worked like a convenient fixed-wireless network for my friends. Boot up the laptop at home, at work, or over at someone else's house- not on the tilt-a-whirl.
Aerie should sell this as a non-intrusive way to get always on service for people who hate the telco/cable co. Sell it as a way to get net access at work without monitoring by your employer. Sell it to cities/governments/utilities as a redundant network for when the phone/cable service tanks. If I recall, the network was brought up in Manhattan to help with rescue efforts.
5. I hope they make a go fo it. I need the service and will pay those rates for it.
Sig?
Sigue Sigue Sputnik!!!
The "risk" assessment of expansion makes all the difference. Metricom overbuild into markets where they obtained very few subscribers, as they probably felt that "first entry" advantage was very important. If you remember Metricom tried to retrench into fewer areas before they went under. They were saddled with the debt servicing of the total cost of their network investment, so they didn't make it. The situation for Aerie is much different. They can expand where they need the capacity and thereby obtained high useage rates from the get go. Second, cost of the networks is coming down and the eased competitiveness of the market allows them to obtain higher subscription rates. Thirdly they can work with third parties in the local markets. CLEC's might be one option if there is anyone left.
Help fight continental drift.
OK.
I was a BIG fan of my Ricochet before they folded.
Did you know you can get 256k out of the Ricochet!?
That is right! If you have USB and big UART patch, you can get 256k in optimal conditions.
I would see 220-250kbps a LOT of the time.
Since the fell, I have been stuck using 802.11b.
There is starting to get *some* penetration in the market (mostly Starbucks) but 802.11 will not see the ubiquity that Ricochet saw.
That and the fact that 256k *with* ubiquity (in major cities) combined with 802.11 really make the two a killer combination.
So charge whatever you want! JUST GET IT WORKING AGAIN! I could seriously pay aroun $100 a month for this. Maybe more.
JUST GET IT WORKING!
Kevin
In other words, hardware to do further expansion should be cheaper than it was for Ricochet.
These folks will probably still be a bit skeptical, as the previous business failed, but on the other hand have the two merits that at least the technology has been shown to be viable, and the business seems credible enough that something did emerge from the ashes.
If you're not part of the solution, you're part of the precipitate.
They're planning on re-opening the markets they were able to buy, but also planning on doing expansion into markets that xDSL or Cable isn't offered yet. With plans of partnering with the rural power companies, they could concievably offer service to areas that would not normally see xDSL or Cable service. The latencies might be moderatly high, but they could work out some pretty usable stuff all the same for people that'd never see anything resembling broadband.
I am not merely a "consumer" or a "taxpayer". I am a Citizen of the State of Texas
I was a field tester for Metricom a few months before they went belly up. The problem with it being used as an alternative to DSL or Cable is that the service footprint is only the metro area with a small amount going outside the city. I would be pretty surprised to see that much of any of their old coverage area doesnt at least have cable available. If Aerie wants to expand to cover a decent area which doesnt have cable already, it will require a major reinvestment on their part as well as a good bit of time. Neither of which I expect investors to be incredibly happy about in todays economic climate.
The utility companies (read: Gas and Electric companies) are looking for ways to differentiate themselves in a time of deregulation. This is a way of doing it, either by partnering with these people and billing for them, or paying for it themselves and using it for their needs as well as the customer's (as part of an energy management system).
Expansion is only an issue if you're having to do it alone- they're planning on having parties with similar interests as theirs but not the resources/technical knowhow to help them do the expansion.
I am not merely a "consumer" or a "taxpayer". I am a Citizen of the State of Texas
I just left a similar post on the Earthlink buys Omnisky story, but like I said there, living out in rural Ohio leaves very few options for internet options. If it's cheap enough, I'll drop my local ISP and get a wireless one so I can play UT and Starcraft in the car. ;?)
We seldom regret saying too little but often regret saying too much.
Hey this means that I can get rid of my cell phone, home phone and DSL and just use my laptop and some VoverIP service! sounds like a money saver to me.
The 'previous guys' had accrued a billion dollars of debt building the infrastructure to provide the service. They had to charge the higher price in order to have any hope of becoming profitable eventually.
Aerie has acquired none of that debt -- they got the entire network for a tiny fraction of what it cost to build it. So they can operate it at a lower cost (btw, this was what AT&T tried to do with @home).
"(Man) tries to live his own life as if he were telling a story. But you have to choose: live or tell." --Sartre
Ricochet is the absolute best solution available out there. the modems are the best design I've seen in years (a testament to that is people buying them that arent even in richochet land, 2 modems can communicate without the service!) and the service is desperately needed. Cellular will never give us wireless access that is needed for the price (sorry, I will not pay per minute for internet time, I will pay $50.00 a month for unlimited access though, verizon will never offer that.)
I beleive that the origional failure was that it wasnt sold in the right places to begin with. New york and Chicago would have been a better choice to sell than any city in california, the number of people is better per square mile and people in a big city would actually use it. (toronto comes to mind also, that would have been a great start city.)
Hopefully this time it will be marketed as a business and personal solution instead of the non-marketing mess they had last time.
Do not look at laser with remaining good eye.
Eventually people will want high-speed access no matter where they are, but it won't be from a niche provider. It will come from the big guys like Sprint and AT&T. Aerie can't make inroads in the modem market, because it costs too much for what you get. They can't compete in the DSL/cable market, because their service is way slower and costs the same. The only compelling reason to be on this service is if you are highly mobile, need a good connection to the Net, and never leave the city you live in or only go to the few cities that support the Ricochet service. I had this service when it was running under Metricom. I found that it was good as a novelty, but never proved itself to be very practical. There was the occasional time that I was stuck in the airport or needed directions while in the car, but nothing that even came close to justifying the $75 I was paying a month. -rich
I'm going to point to this +5 informative post I made before I jump in and flame on Aerie.
Now what the heck are you guys thinking? Cheaper my foot "which it plans to sell for $39 to $49 a month, according to Aaronson" This is the same price metricom had when they first introduced the ricochet service years ago. It was $20 for the ISP and $20 for the modem rental. Wheels in the sky keep turning backwards. (brain fart sorry) Following the link Michael provided I got to this paragraph, " To avoid the $4 to $10 fees Metricom paid on each pole-top transmitter, Aerie is negotiating with municipalities to exchange free service for pole space." This is nothing new, nothing new at all, Metricom had an entire department dedicated to just that purpose called the Right of Way department. When Ricochet was first rolled out in San Jose the same deal was made with the City of San Jose. I think we gave the city like 300 modems and free service in exchange for letting us use their poletops. Just about every city we ever made that deal with TURNED on us eventually. Wanna know something else? They kept the modems too, and continued to leech off of the service.
If Aerie really want's to make headway into the wireless ISP marketplace they need to do more than follow the obviously failed strategy employed by metricom. People will gladly let you put an unsightly pole on top of their house if it means free internet service. That was what metricom did in the beginning to create service area's. If there was a big gaping hole in the network somewhere, and somebody subscibed to the service and wasn't able to get it, metricom would either A. install a poletop, or B. install a wired access point (which was way cool cause it meant a T1 line coming to your house) If the 802.11 networks have proven anything, it's that a grassroots effort for wireless connectivity does work without having to get the city involved at all.
I wish Aerie the best of luck getting the ricochet network back to full operational status again, but if you don't learn from the past you're doomed to repeat it. Try and keep it down to $30@mo if you're really serious about getting subscriptions. $39 to $49? Hell might as well say you're going to charge $40 to $50 a month. Sorry, it was just really insulting to see all this excitement over a one dollar change in price.
60-80 kilobytes per second with a Macintosh w/9.1. You have to open the receive window to 65535. Find out how @www.sustworks.com. Mac tcp/ip is the same as NT/2000/XP/Solaris. Its made by Mentat. This has been the case with Macs since '95.
While the network won't depend on wires,
it requires a lot of infrastucture to make it work. You need even greater density thann you do with cell phones (about three times as much, IIRC). Even in the Bay Area there are tons of places you can get cell phone service where Ricochet service was flaky.
That makes it highly impractical for rural solutions -- heck, you'd have to have a tower located at each farmhouse, just about.
The value of the network will only be realized if 2.5/3G fails miserably, in which case, as a mobile substitue in dense metro areas, you might have a market.
But personally, I feel it's a branch of technology that eventually goes nowhere.
This same thing happened when we were building railroads all over hell and gone. Many of the initial builders lost money on their debt service. Of course, some of the more intelligent ones, e.g. James Hill, didn't lose money. It's not a given that you have to lose money by creating a big network, but surely a better way to do so is to acquire smaller profitable networks, than by building one huge network without any evidence of profitability.
-russ
Don't piss off The Angry Economist
... don't seem to understand the excellent niche that Ricochet could potentially occupy.
A company that I was doing some contract work for was considering deploying a laptop computer with a Ricochet network modem and an 802.11b card.
The 802.11b card was to be used in-house for wireless Internet, inventory cataloging, and non-sensitive billing (e.g., no real information was sent over the air; and yes, what was had strong encryption applied to it).
The Ricochet card was to be used by employees and perhaps (here's the niche) contract workers in the field to show people the inventory and enter orders in real-time via an SSL encrypted link.
Certainly, this isn't the only niche that a product such as Ricochet could occupy; for example, they could put the transmitters near restaurants and perhaps even at theme parks (such a shame that Disney didn't make their 802.11b public, not that it'll stop anyone) or other places of interest.
The plan never took shape, though, since Metricom folded.
I don't think this will work because of a lack of interest on the
part the average net surfer. Most of the internet's content is
centered around text and html. Take this site for example.
I didn't come here to view fancy graphics or to download
anything large, I came here to read about what was going
on in the world and to contribute my two cent's worth.
Most of the more succesful sites on the net
(Amazon.com and Ebay come to mind) follow the
same formula this one does, first they use text to describe
the main points of interest and then they use gif images to
supplement that description. Finaly they use html and java
bring it all together and make it functional. All these aspects
of the net and the sites that rely on them are and will remain
easily accesable with a simple, low cost, dial-up modem. And
because of this the average consumer will not see the need
to spend 2 to 3 times as much of their money every month
for performance they won't use much anyway.
Please talk to me