Solavei is making its official debut Friday, already armed with 25,000 customers ready to spread the word about its unlimited, social network-driven mobile service on T-Mobile USA 's network. (See Solavei Launches Recruit-Your-Friends Wireless Service.)
The mobile virtual network operator (MVNO)'s contract-free service shakes up the business model for mobile, rewarding subscribers with cash for each additional subscriber they recruit to the service. After a $49 sign-up fee, subscribers pay a flat fee of $49 per month for unlimited data on any unlocked GSM phone, while racking up money if they choose to bring more people on board.
This way, Jim Ryan, head of products at Solavei, says that the company is making up the money it pays out by not doing any advertising on its own. He says that the company started with just 12 representatives and has since grown to 25,000 with 93 percent choosing to refer the service to friends.
"The amount of money spent on ads and distributions is big," Ryan says. "Were not spending any of that. It's good business to make your customers do it. It's very efficient."
Solavei wholesales access to T-Mobile's high-speed packet access-plus (HSPA+) network, but Ryan says it will also offer service on its upcoming Long Term Evolution (LTE) when it's ready.
"We're excited about what T-Mobile is doing to advance its network, but they also had plenty of room to put on new customers, and we expect to add a ton," Ryan says of Solvei's decision to work with the carrier, which is stepping up its focus on the wholesale market. T-Mobile got the MVNO up and running in just six months. (See T-Mobile's New CEO to Lead Challenger Strategy.)
Sprint Nextel Corp. (NYSE: S) has been another champion of the wholesale mode, racking up new MNVOs like Republic Wireless , FreedomPop and Ting. (See Sprint Builds an MVNO Factory, Startup Taps Devicescape for Wi-Fi-First Network, Meet the New US Wireless Operators, FreedomPop to Phase Out Clearwire for Sprint LTE and Ting: Bad Name, Great Idea.)
— Sarah Reedy, Senior Reporter, Light Reading Mobile
