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Monet Closes EV-DO Network

Wireless carrier Monet Mobile Networks Inc. is to shut down its high-speed CDMA 2000 1x EV-DO network next month and has filed for Chapter 11 bankruptcy protection.

The closure comes less than 18 months after the startup launched what it touted as “the nation’s first high-speed, mobile Internet service,” using network kit from LG Electronics Inc. The service targeted both consumer and business users in eight cities in Wisconsin, Minnesota, and North and South Dakota (see Monet Launches EV-DO).

A posting on the carrier’s Website says: “Due to regrettable circumstances, Monet Mobile Networks, Inc. (Monet) will suspend providing service to its customers on April 2, 2004.”

The five-year-old company -- which amassed $81 million in VC funding -- filed for Chapter 11 protection on March 4 at the U.S. Bankruptcy Court in the Western district of Washington. According to court papers, the company has liabilities of over $32 million and nearly $3 million in assets. Calls to the carrier’s headquarters in Kirkland, Wash., remain unanswered at press time.

Yet, despite the network failure, industry analysts remain upbeat on the future of the technology. Earlier this year the nation’s largest carrier, Verizon Wireless, announced plans to expand its EV-DO deployments in Washington and San Diego to a number of “major” U.S. cities by the end of this summer (see Verizon Repeats on 3G).

EV-DO networks crank up the data rate to a theoretical 2 Mbit/s, but offer between 300 and 500 kbit/s in the real world. This is at least five times faster than current U.S. cellular networks (CDMA2000 1xRTT and GPRS; see A Wireless Taxonomy for more detailed definitions).

“This shouldn’t impact Verizon,” opines Peter Jarich of Current Analysis. “Clearly they are looking at a very different business model from Monet. Verizon’s first two test markets were Washington and San Diego, not Mayberry and Mt. Pilot.”

“This doesn’t portend badly for the future of EV-DO technology,” concurs Cliff Raskind, director of wireless enterprise strategies at Strategy Analytics Inc. “EV-DO has great legs as a future technology.”

According to Ken Rehbehn at Current Analysis, Monet’s failure is typical of the difficulties faced by small carriers in low-density areas. “Achieving sufficient business volume outside of major metropolitan areas to pay for operational costs is no small challenge -- particularly given the plethora of high-speed data options available today from cable and DSL. EV-DO delivers outstanding data performance, but subscribers must pay for that flexibility. Only a small number of large operators will be able to reach the scale needed to cost-effectively support these users.”

Strategy Analytics' Raskind expects Monet's network to be acquired by a larger, rival player. “They broke some very important ground when they launched their network, and their assets will most likely be seized in short order by another carrier.”

The carrier itself admits it is “looking for options to make Monet Broadband service available after April 2, 2004.”

— Justin Springham, Senior Editor, Europe, Unstrung

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