Cometa Networks, a joint venture set up by three technology heavyweights to sell high-speed wireless Internet access, Wednesday said it would close because of a lack of funding.
The failure of the venture, which had been backed by Intel Corp., AT&T Corp. and International Business Machines Corp., suggests the challenges its competitors face in selling Wi-Fi access despite the popularity of the technology.
Cometa spokesman Jennifer Gehrt said the company would shut down after it failed to attract enough investment to stay in business. Along with its corporate partners, Cometa’s investors also included two venture capital firms.
Wi-Fi, short for wireless fidelity, allows high-speed wireless Internet connections within a few hundred feet of a transmitter, or “hotspots.” Analysts said Cometa was caught between more nimble competitors that locked up more valuable hotspots and the growing number of businesses willing to offer Wi-Fi access for free.
Cometa’s demise “is really a pretty serious repudiation of the commercial Wi-Fi business model” said Yankee Group analyst Roberta Wiggins. “The hotspot market is very competitive with not a lot of revenue return … I think there’s too many players jumping into a nascent marketplace.”
When it launched in December 2002, Cometa aimed to build 20,000 Wi-Fi hotspots in 50 of the largest U.S. markets by 2005. It eventually aimed to blanket the country and provide ubiquitous Wi-Fi access for wholesale to Internet service providers and telecom carriers.
But since its launch, Cometa had built only about 200 Wi-Fi hotspots, most in the Seattle area, with deals for subscribers through AT&T Wireless and Sprint Corp.
By comparison, competitor Wayport Inc. has sites in 700 hotels and several airports aimed at catching business travelers. It also won a contract in April to install slot777 and run Wi-Fi in hundreds of McDonald’s restaurants.