Omnisky Declares Bankruptcy, Sells Out to EarthLink

EarthLink, the U.S.'s second largest ISP, has agreed to buy just about all of OmniSky’s assets, including its subscriber base. As part of the transaction, OmniSky and EarthLink intend to transition OmniSky’s 32 thousand subscribers to EarthLink with the intention of continuing uninterrupted wireless service. As part of the deal, OmniSky, a wireless ISP, is declaring bankruptcy. This means the sale requires the approval of a bankruptcy court and a bankruptcy court-supervised overbidding process, where bidders with higher and better offers may emerge. Financial details of the deal with EarthLink were not given.

The Chapter 11 filing allows OmniSky to maintain its operations and continue to provide wireless service to its subscribers during the sale approval and transition process.

“This filing is intended to protect and maximize the value of our business for the benefit of all of our stakeholders and to preserve uninterrupted service for our subscribers until they can be transitioned to EarthLink,” said Patrick McVeigh, OmniSky’s Chairman and Chief Executive Officer.

While the bankruptcy court reviews the proposed sale to EarthLink and other offers that may emerge, OmniSky believes that it has sufficient cash on hand to finance its operations, including supporting the company’s post-petition trade and employee obligations, as well as its ongoing operating needs during the process.

The company has been struggling for a while. Last month, it failed to release a financial report for its most recent quarter, a violation of SEC rules. It has since been delisted from the Nasdaq.

In an interview with, Lance Weatherby, an executive VP of EarthLink Everywhere, said, "The primary reason we're doing this deal is because we like the product that it's created: great client-side software and nice user interface."

"OmniSky didn't take off because it cost $40 per month to get data services on a hand-held device. People want to pay $20 per month," said Mr. Weatherby, implying that the company intends to lower the subscription price.

Earlier this week, Yada Yada, an OmniSky rival, permanently stopped service.

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Omnisky -- why a flop?!

mikecane @ 12/7/2001 12:07:35 PM #
OK, can we have some discussion as to why you lot *didn't* get OSky service? Cost, cost, cost?

RE: Omnisky -- why a flop?!
I.M. Anonymous @ 12/7/2001 12:16:07 PM #
Cost was one reason but another was that it isn't available in Atlanta, where I live. But seeing as EarthLink is based out of Atlanta, I hope that will soon change.

RE: Omnisky -- why a flop?!
I.M. Anonymous @ 12/7/2001 12:21:23 PM #
If you look at their map, their coverage was lousy. I can understand if it is not available in podunk AK, but there were quite a few major markets that were never covered.

Also, if you did happen to live in the 5% of the country that was covered, the service was spotty at best. Not really Omnisky's fault, the technology is just not that good.

RE: Omnisky -- why a flop?!
I.M. Anonymous @ 12/7/2001 12:32:47 PM #
I was in a store in Overland Park KS a few months ago and they actually had these Omnisky modems for sale.
I asked the clerk if buyers got, you know, PISSED, when they got it home and found out that they were a four hour drive to the nearest covered area.

I live in a major (not covered) city and I waited forever for this before it became obvious that it was never going to expand any further. That message about "now available in Orange county" has been there for, what?, a year?

I finally bought a nokia 8290 (IR port and built in modem) and have been using it to connect to the net with my Palm 505 (they have been promising those modems for quite a while now too) ever since.

RE: Omnisky -- why a flop?!
I.M. Anonymous @ 12/7/2001 12:33:35 PM #
Are you guys even current subscribers? Criticize the service. If you did your homework you would realize they were one of the first wireless providers that did the best with the way technology was at that time! I know it will improve has more and more providers come on line to serve the wireless industry. Give them some respect for at least stepping out where many wouldn't even dare tread. I love my omnisky service! Do you guys even have it? Then be quite!

RE: Omnisky -- why a flop?!
I.M. Anonymous @ 12/7/2001 12:50:04 PM #
Uhhh, I think the original posters question was why people "DIDN'T" subscribe to the service. I agree that coverage and price scared a lot of people off, including me. Now I'll be QUIET.

RE: Omnisky -- why a flop?!
CGordonn @ 12/7/2001 12:52:54 PM #
Two months ago I aquired a virtually new Vx from my father in law. I then found a good used OmniSky modem on eBay, and signed up for OnmiSky for AOL. Asside from having to have the modem IP address reset, all has been working great. I live in Virginia Beach VA and so far have received good coverage where ever I go. Its sad to see OmniSky go the way of Yada Yada, but I am glad EarthLink has decided to purchase and hopefully expand on what OmniSky has to offer. One of the other posters to this thread mentioned cost as being a factor for OmniSky's demise. I say cost is relative to what the user is willing to pay for and receive in return. Oddly enough OS for AOL is $10 cheaper then regular OS. I like being able to whip out my Vx and check my AOL mail, or IM with my online friends while waiting for my wife to get off work. For me $29.95 is well worth it. Lets hope the already good service will improve under EarthLink.


Omnisky - Not So Bad...
I.M. Anonymous @ 12/7/2001 1:10:03 PM #
I am a current subscriber. Started Dec '99 with the beta program. I live in Northern Va, near Dulles Airport. Besides the cost (when I first started there wasn't much of a choice except Ricochet and see what happened to them as well), I have been very happy with the service. It works in most of the DC metro area. In addition I often travel on business. I've used OS in Houston TX, Boston Mass and other cities with no trouble. As new technologies have emerged I've been noticed that the speed of OS leaves a bit to be desired, but for email it doesn't have to be that fast.

Will I upgrade to a new OS account when I move to new hardware? Probably not, unless I can get a good deal on a modem and a cheaper service plan. I'll probably move to a new cell phone that will connect to which ever PDA I buy next.


RE: Omnisky -- why a flop?!
dspeers @ 12/7/2001 1:52:05 PM #
Cost of the service is one thing. The other is the cost of the modem. It's just not worth it for me to spend $369 for the Minstrel (I have an m505), especially after I shelled out $449 for the Palm itself. This is "nice to have," not "need to have."

I could see paying $100-$200 for a wireless modem (with pass-through for the keyboard, please) and $20-$30/month for the service. Otherwise, I'll make do being tethered to my PC.

RE: Omnisky -- why a flop?!
I.M. Anonymous @ 12/7/2001 1:57:27 PM #
I would happily have paid $40/month for it...but no coverage at all, good or spotty, in the boonies, so not much point.

RE: Omnisky -- why a flop?!
I.M. Anonymous @ 12/7/2001 1:58:41 PM #
The boonies being where I live.

RE: Omnisky -- why a flop?!
I.M. Anonymous @ 12/7/2001 3:08:33 PM #
I was an Omnisky beta tester and kept the service for over a year, though I used it less and less as time went by and, when the credit card it was on expired, I let the service lapse, as well.

Why? Well, it certainly wasn't the cost, because I then signed up for a Blackberry, which I adore. Rather, to me at least, the problem with Omnisky was basically twofold (though, of course I would have liked it to be cheaper, too): first, though I live and do most of my work in New York City and environs, even here I found service much spottier than with a cell phone. When inside, the modem worked only near a window -- and then, only when the building was tall and not obstructed by other buildings. In a boardroom, or an interior office, or at a restaurant, you could be almost guaranteed that there would be no reception. And these are the places you really want check to see if an important e-mail, or document or agreement has come in. Otherwise, what's the matter with waiting until you get back to the office, or just calling in for messages?

Second, the light notifying you of new mail almost never worked properly, meaning you had to turn your Palm on and download new mail manually, which for those of us who get 200 messages a day could amount to a heck of a long wait after a two hour meeting. In no way could Omnisky's service compare to the Blackberry which almost instantly lets you know of new messages.

I don't mean to advertise the Blackberry or unfairly malign Omnisky. I know many very happy users of Omnisky who need true TCP/IP connections and who greatly value the service. And certainly, not everyone needs all of their e-mail 30 seconds after it arrives, as is the case with the Blackberry.

It's just that I can easily understand why the appeal of EITHER of these services is so limited right now. Too many people just don't see the point.

Someday soon, with 3G service, I guess, there will be a company/hardware/wireless service which gets widespread acceptance. It's just that, at the moment, the appeal of such services and devices is limited to very early adopters who will overlook inconvenience and limitations to squeeze out the value they need.

Someday, there will be a value that many people actually WANT.

Dan Prizer

RE: Omnisky -- why a flop?!
I.M. Anonymous @ 12/7/2001 4:07:55 PM #
I've been an Omnisky subscriber from day one, Beta Tester in the #600 range, and I can tell you the service has met my expectations in every way. My travel has rarely taken me to places where it wouldn't work, and I've even used it in places you would never expect it TO work. Best of all, my rate was $30.00 AND I got the full cost of my modem rebated in the first year.

I hope Earthlink does at least as well by us but I'm not holding my breath.

Omnisky in Atlanta
bcombee @ 12/7/2001 6:03:26 PM #
The problem with Atlanta (and the rest of BellSouth's main territory) is that neither analog cell carrier has deployed CDPD. This is a channel that Omnisky's hardware used for its wireless access, and its based on reusing spectrum that was deployed for analog cell phone users. They had contracts with the two main CDPD carriers: Verizon and AT&T, so the Omnisky service area was the union of the two companies' areas. BellSouth had one of the analog licenses in Georgia, but they had their own Mobitex network they didn't want to compete with. The other carrier just never bothered deploying.

Until the B-side carrier can be prodded to deploy CDPD, Earthlink won't be able to provide that service around Atlanta, even though there does seem to be demand. Too bad.

RE: Omnisky -- why a flop?!
I.M. Anonymous @ 12/8/2001 9:34:05 AM #
Didn't work very well or reliably in Phoenix or Tucson Az.

Stand-Alone wireless data will never work...

I.M. Anonymous @ 12/7/2001 1:02:44 PM #
You need to bundle it with voice to make it a viable business enterprise. The big boys (AT&T, Verizon, Cingular, etc.) are the only ones who can do this.

RE: Stand-Alone wireless data will never work...
Midknyte @ 12/7/2001 1:12:26 PM #
I agree with this. I'm going to be cutting my OS service and doing pretty much the same, albeit with an IR phone...

Oh, and, without interruption? Not. Their email server has been in the toilet for much of this week with regards to connecting to non-OS POP 3's, and they have cut their 24 hr tech support.


Reinventing the wheel.
I.M. Anonymous @ 12/7/2001 1:27:22 PM #
The largest start-up cost for Riccochet/OmniSky was, of course, trying to build a nationwide data infrastructure.

Spend a day hunting down cellphone towers. Do you realize just how many of those things there are in your average city?

Here's a map of downtown Vancouver, BC to give you an idea:

Then remind yourself how bad celphone coverage can get in most cities.

Keep in mind that those OmniSky nodes are probably $2000/ea, at least, throw in the cost of tower rental, and access for all the points...

Is it any wonder why prices were high, nobody was turning a profit and coverage was so lousy?

The Treo inventors have the right idea - piggyback on an exsisting network.

As far as prices - Isen't G3 supposed to exponentially increase the amount of data bandwidth available per node? If the cel providers are BRIGHT, they'll drop the prices instead of getting greedy and get some market saturation going.

We'll see, I guess.

RE: Stand-Alone wireless data will never work...
I.M. Anonymous @ 12/7/2001 2:29:15 PM #
Ricochet (over)built its own network; OmniSky most definitely did not. It secured agreements to resell AT&T and Verizon wireless data connections with no U.S. roaming charges.

RE: Stand-Alone wireless data will never work...
Coyote67 @ 12/7/2001 2:54:13 PM #
I am a former YadaYada subscriber, was for about 2 months. Now a lesson why Omnisky,yada yada died. Main reason, PRICE. Come on people, why the hell will anyone pay $30-$50 for something that is limited to only their handheld. I pay $30 for my cable modem, and get a whole lot more out of it then I would have if I used it with my pda. Earthlink has the right idea, bundling. A person gets dsl/cable. Then they get the option of getting wireless inet for their pda. They are more likely to do this because a. they are informed about it from their current provider, b. they actually learn you can do that, c. it'll be a lot cheaper, hopefully. OS did say that the price will stay the same, but that could just mean it won't go up at all, not that it won't go down. Also, the coverage is horrible on cppd. Kyocera, Airprime, and Handspring have the right idea. Go through the providers, who people already go to and use existing established networks.

Btw, to the guy who was mentioning 3G. It should be noted that 3G needs even more towers then are already in the field to operate.

When you have a Clie showed up your mouth, you can only talk in vowels.

Called that!

I.M. Anonymous @ 12/7/2001 1:10:17 PM #
That was the most obvious thing in the world.

RE: Called that!
I.M. Anonymous @ 12/7/2001 1:14:44 PM #
It was so obvious, I'm not sure what you are talking about. Called what?

New Product

I.M. Anonymous @ 12/7/2001 1:57:15 PM #
Hopefully Earthlink will now start to support more current products liket the Sony's.

RE: New Product
Coyote67 @ 12/7/2001 2:59:05 PM #
Its not about the products, its about the modems. If there was a modem for the popular clies, not just the lowest oldest model, they would have had them long time ago. If its a CPPD modem, all you need to do is activate it through them, like a cell phone.

When you have a Clie showed up your mouth, you can only talk in vowels.
RE: New Product
rldunn @ 12/7/2001 4:39:47 PM #
"When you have a Clie showed up your mouth, you can only talk in vowels."

Does this make sense to anyone? I'm assuming 'showed' was a typo and should be 'shoved', but assuming that, I'm still not sure what this is trying to say.

You woulden't HAVE this problem...
I.M. Anonymous @ 12/7/2001 11:31:00 PM #
If you were buying a PDA from a company that MADE PDAs, instead of buying one from a company that makes consumer appliances.

Everybody else (Handera (Definately!), Handspring, and finally Palm ) realized that they coulden't sell peripherals unless they kept the same connector design for longer than a model or two.

Sony thinks it's still making MiniDisk players, where they can change the case completely around every revision. It's an OK way to think when you're selling something that just needs a headphone plug to work, but it dosen't cut it with more complex hardware.

Maybe someday Sony will settle down on a hardware platform - But when they do, you'll have to buy another one! God knows they won't offer adapters. Hell, they diden't even want to offer OS upgrades.


RE: New Product
I.M. Anonymous @ 12/8/2001 12:26:02 AM #
"Everybody else (Handera (Definately!), Handspring, and finally Palm ) realized that they coulden't sell peripherals unless they kept the same connector design for longer than a model or two."

Do you notice that N6xx, N7xx, S3xx series all got the same @SS (connector design), that's why they all can use the same Clie Modem. Only The T-series has different ass, because of the design factor. Maybe next time you should go to a Compusa and check out the real thing b4 typing.

"Hell, they didn't even want to offer OS upgrades."

O yeah you can upgrade your OS on Visors .... hmm ... errr ..... maybe not, O yeah you need to buy a new Visor device to get OS Upgrade, because of the low cost ROM they use ... forgot ... sorry You can't even upgrade it even you pay $100.

if they do this i will change my isp

I.M. Anonymous @ 12/7/2001 4:56:42 PM #
"OmniSky didn't take off because it cost $40 per month to get data services on a hand-held device. People want to pay $20 per month," said Mr. Weatherby, implying that the company intends to lower the subscription price.

if they do this then i am changing to earthlink for my landline...and then get a modem for my palmie


really sad...

I.M. Anonymous @ 12/7/2001 5:35:35 PM #
If I were to ever buy a wireless service, it would have been omisky because it is the most easy interface I know to date, and their support on their site was very VERY good. Its sad to see them go, now there is not that many wireless services left. Except for cellphone bundles although...
PDANature - - Hourly refreshed PDA news, reviews, discussions, features, commentarys, etc.

P0rn on it???

I.M. Anonymous @ 12/7/2001 11:11:07 PM #
But the REAL question is (was) could you get P0rn on 'em?? (Heh...Heh...heh...) to close doors on Palm VII's according to SVPUG

I.M. Anonymous @ 12/8/2001 4:21:15 AM #
Those Palm guys who sat in on the Silicon Palm Users Group on Dec. 6 let the cat out of the bag. will discontinue it's wireless service by Feb 2002. Due to weak demand and high cost/volume of tech support.

RE: to close doors on Palm VII's according to SVPUG
I.M. Anonymous @ 12/8/2001 7:43:27 AM #
Can someone confirm this? Friends of mine have Palm7x's and LOVE them. What a waste.

RE: to close doors on Palm VII's according to SVPUG
I.M. Anonymous @ 12/8/2001 10:47:25 PM #
I confirmed it too. Since Palm will be coming out with the next wireless successor to the VIIx, it will not have the query limitations. The new wireless device will support the full TCP/IP stack. This will offer a faster and better connection, faster downloading. It will support voice and data.

RE: to close doors on Palm VII's according to SVPUG
I.M. Anonymous @ 12/10/2001 12:09:08 PM #
I'm sorry folks, but this is a completely false rumor. As a Palm employee, I cannot disclose Palm's plans for Mobitex-based product beyond Palm VII, but I can safely say that the Palm.Net service will continue!



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