Amid the rubble, Ricochet bounced back.
In the aftermath of Sept. 11, few companies can claim thefortunate circumstances with which Ricochet owner Aerie Networks has met. In themonths after the tragedy, not only did Aerie survive, it finally uncovereda credible post-bubble business opportunity.
"I think Sept. 11 increased awareness, a need for other types ofpublic safety
CEO Mort Aaronson, whose company was renamed Ricochet Networks this year. "It made the market receptive to it, without question."
Ricochet's rise from the ashes of insolvency of its former owner
, provides a poignant leitmotif to the country's healing. Just as hundreds of companies recouped, rebuilt and returned to lower Manhattan, Ricochet, a high-speed wireless data service, found new purpose.
It's also an important footnote to the country's urgency overfortifying its communications network. Defense contractor
, for instance, is creating a mobile command center for emergencyworkers to address some of the communications incompatibility among thedifferent services units. Separately,
and government agencies are buildingan emergency wireless network to link 40 Washington, D.C.-area police, fireand safety services agencies called the Capital Wireless IntegratedNetwork, or CapWIN.
Closed Before the Attacks
Just last August, Ricochet's former owners Metricom were forced to filefor bankruptcy, buckling under the weight of a crushing debt load relatedto its expensive nationwide buildout and the overall depressed market fortelecom products. At its high point, Metricom, which spent more than $1 billion building out a nationwide network of radios tacked onto trafficlight pole tops and buildings, never attracted more than 51,200 subscribersin 21 cities. These fiercely loyal customers paid$70 to $80 a month for the privilege of surfing, sending andreceiving wireless data in its limited coverage areas. The serviceofficially shut down on Aug. 8, 2001.
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At the same time, Aaronson's Aerie Networks was in the process of windingdown its own money-draining operations of laying fiber across thecountry. The company was casting about for a lifesaver after a $500 million commitment from
to provide equipment financing fell through in April 2001, and, according to the
Wall Street Journal
Aerie had less than $10 million of its original $147 million venture capital investment left. "We were in the middle of pulling the plug from
the original business," said Aaronson in an interview.
In the weeks after the attack, with wireless switches and transmittersin virtual disarray in the lower downtown area, New York City officialscontacted Metricom to relight the networks temporarily. To their surprise,most of Metricom's Ricochet equipment had escaped unscathed. As a result,nearly 1,000 emergency service workers were able to send buildingschematics and disaster area photos from the site back to Federal EmergencyManagement Agency headquarters.
By the end of the year, Aerie Networks picked up the remaining assetsfrom Metricom for $8.25 million. Metricom's recent partnership with NewYork City bolstered Aerie Networks' new strategy to relaunch the serviceand be profitable, a tall order given Metricom's recent demise.
Apparently, according to Aaronson, a relatively large chunk ofMetricom's expenses was earmarked for paying city governments acrossthe nation for rights to build equipment on city-owned properties."There was too much in fixed operating costs," Aaronson explained. "Wethought of a more efficient way to sell."
In the new plan, Aerie Networks would strike barter deals with citymunicipalities for the right to operate its radios built on city propertyin exchange for free and subsidized Ricochet services for city agencyemployees.
Early evidence suggests it's working. Since August, Ricochet hasrelaunched in its hometown, Denver, with a 20-year contract tooperate its radios built on city property in exchange for about 1,000 freeRicochet service contracts. The service, which now costs regular consumers$44.95 a month, offers residents who live in areas where neither cable nor DSLservice is available a rapid alternative roughly equivalent to more than double dialup speeds.
Other markets including San Diego are slated to be served by the end ofthis year. Earlier this August, Agostino Cangemi, New York City's deputy commissioner of technology and telecommunications, said New York City is in negotiations to reintroduce Ricochet service.
Ricochet's happy ending has an ironic edge for investors: Because bankrupt, publicly traded Metricom was acquired by closely held Aerie in November 2001, it's rise from the ashes didn't translate into stock-market riches.