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After announcing a bold plan to give corporate travelers a broadband wireless connections in airports nation wide, SoftNet Systems Inc. has grounded its Aerzone Corp. subsidiary after less than a year of operation.
Company officials blame Aerzone's demise on a higher-than-expected buildout costs. With the capital markets now soured to startups "it was determined that it was not likely that Aerzone could raise the necessary capital to sustain its operations over the long term," SoftNet chairman and CEO Garrett Girvan said in a statement.
The announcement follows the departure of Aerzone CEO Larry Brilliant, who resigned citing health concerns. With the Aerzone service shutdown Brilliant also resigned from SoftNet's board of directors.
Aerzone crashed not long after another SoftNet-backed enterprise, ISP Channel, terminated its service of providing broadband Internet access services to small-market cable operators.
Aerzone, formed in February as SoftNet Zone, targeted mobile business professionals, offering a wireless broadband connection at airports and convention centers. In short order it acquired Laptop Lane business centers in 15 North American airports and by summer had forged deals with United Airlines and Delta Airlines to offer the mobile Aerzone service in flight lounges.
The wireless service, based on 802.11 local area network technology, was up and running in Canada at the Vancouver and Ottawa airports, according to a spokeswoman. The year-end shut down was to be accompanied by an unspecified number of layoffs.
SoftNet is taking a charge for the quarter and has delayed its planned earnings announcement until Jan. 12. Meanwhile the company will start shopping for buyers for its 15 Laptop Lane outlets. SoftNet also will continue running its Intelligent Communications subsidiary, which provides two-way satellite data delivery to ISPs, schools, corporations and businesses.
Even as Aerzone collapsed, chief rival Metricom Inc. announced rollout of its Ricochet broadband mobile wireless service in its latest markets of Denver and Detroit.
Also aimed at mobile business professionals, Ricochet is offering citywide wireless service at 128 kilobits per second via a mesh of cell units mounted on light poles. With the two latest additions, Ricochet service is now available in 14 markets, including Atlanta, Baltimore, Dallas, Houston, Minneapolis-St. Paul, New York, Philadelphia, Phoenix, San Diego, the San Francisco Bay Area, Seattle and Washington, D.C.
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