Meet the New US Wireless Operators
The growth of Wi-Fi and demise of unlimited data plans in the U.S. have given way to a new crop of wireless service providers hoping to make a dent on the mobile market here.
NetZero Inc. , Republic Wireless , FreedomPop and Voyager Mobile are a few examples, all either riding on Sprint Corp. (NYSE: S) or Clearwire LLC (Nasdaq: CLWR)'s networks, but each offering their own twist on mobile service. (See 4G Is Nearly Free With NetZero.)
Voyager, a Sprint mobile virtual network operator (MVNO), attempted to launch its $19 unlimited voice service on Monday, but the site was hit with a "malicious network attack" causing it to delay its launch to a later date. The company says its goal is to bring low-cost wireless to all, and it's also planning to offer a "frequent talker program" in which users are rewarded with phone upgrades, free months of service, gift cards or other incentives the more they talk. (See Voyager Takes Off Cheap With $19 No-Contract Plans.)
This freemium model is also what the soon-to-be-launched Clearwire MVNO FreedomPop is pitching, but it's not necessarily relying on ads. Speaking at CTIA last week, The company's CMO, Steven Sesar, said it would give away the service for free, or cheap, and then upsell users for more data, much like an airline does for seat upgrades or checked bags. Sesar said the pay-as-you-go service will go live toward the end of the summer. (See FreedomPop Bets on 4G With Clearwire.)
"From our view, we want to give all Americans a certain amount of free data," Sesar says. "We want to provide flexibility to pay as you go and not be beholden to an unlimited amount that's been throttled and capped. It's just pay as you go and charge something fair for overages."
So far that amount of free data isn't much. FreedomPop has available for pre-order a $99 iPhone sleeve on that includes a paltry 500 MB of data with $10 charged per gigabyte of overage. Customers can earn more data by referring friends or signing up for additional services, but FreedomPop won't yet say what those services are.
FreedomPop and Voyager Mobile aren't the first to try a freemium route. Blyk in the U.K. and Virgin Mobile USA Inc. (NYSE: VM) both attempted to swap ad views for data, but both companies ended up abandoning their services when consumers weren't interested. (See Blyk Exits UK Ad-Funded MVNO and Sugar Mama Hits 9M Minutes.)
Compete Inc. 's Chris Collins and Bluestein & Associates' Whitey Bluestein are two analysts concerned FreedomPop could go the same way. Collins says the carrier is limited by the reach of Clearwire's WiMax network, but more so by its core value proposition.
"The idea of 'watch ads for credit' will only appeal to the most economically challenged consumer – and what is the appeal of that to an advertiser?" he asks in an email to LR Mobile.
Republic Wireless: A Wi-Fi virtual network operator
The analysts are more excited about another new market entrant, Republic Wireless. The company is also riding on Sprint's network, but it's positioning itself as a Wi-Fi service that will use cellular for data offload.
Like Voyager, Republic is also selling $19 unlimited plans and encouraging unlimited usage. Dally said it sold out of its launch phone -- the basic, $199 LG Electronics Inc. (London: LGLD; Korea: 6657.KS) Optimus -- overnight when it opened for beta users in November.
"I was astounded how many people lined up for it," Dally said. "There are important segments in the market that aren't device driven, and $18 is an astounding price point."
Dally said Republic Wireless is still learning who will make up its target Wi-Fi user base, but analyst Bluestein is willing to bet it's a large group. He called the company "potentially game changing," but noted it's a complicated scenario Republic is trying to play out, since it's counting on more traffic traversing the Wi-Fi network than cellular. He sees the target market as someone who has Wi-Fi at home and wants a smartphone, but is still value-oriented first.
"They're going to get an Android phone, and depending on what Republic offers, it might be pretty darn good, so they'll pay for it," Bluestein says. "I think they have the potential for really strong growth provided they can execute and provided the proprietary [handoff] technology works as advertised."
— Sarah Reedy, Senior Reporter, Light Reading Mobile