& cplSiteName &

Why WiFi-First Works for Wireless

Sarah Thomas
12/30/2013
100%
0%

In the US, mobile data prices are among the most expensive in the world, and WiFi is among the most prevalent. At the intersection of these two trends is a number of new startups hoping to capitalize on both.

Republic Wireless kick-started the movement of offering a WiFi-first mobile service when it launched in 2012, and its success thus far has inspired a number of new mobile virtual network operators (MVNOs) to go a similar route. TextNow and Scratch Wireless are two other new launches, both of which are offering "cellular offload" to Sprint Corp. (NYSE: S)'s network. (See Carrier WiFi: The Key People, Top 10 Carrier WiFi Movers & Shakers, and Touring Sprint's Well Oiled MVNO Factory.)

Scratch Wireless, launched in October, only uses the WiFi that's readily available to consumers today, such as in their home and office, but Republic Wireless also pulls in Devicescape Software Inc. 's network of millions of hotspots. Devicescape CMO David Nowicki says that Republic is validating the WiFi-first, cellular backup model, and he expects to see many more launches in the same vein.

"Republic is one of those companies that not only all the operators in the US talk about at conferences, but all the European operators are talking about them as well," he says. "You'll see more of that coming."

The reason why is simple: As analyst Whitey Bluestein explains it, the chances are if you're a wireless user in the US, you're already defaulting to WiFi to keep costs down. Why not use it exclusively, or at least primarily? These startups are banking on that behavior and offering consumers a service that runs primarily on WiFi for low to no cost, only going up when the user is out of range and on the cellular network.

The MVNO's motives aren't entirely pure, of course. The wholesale prices they pay for mobile broadband are not exactly cheap, especially if they are paying by the megabyte. It behooves them to keep their customers on WiFi, just as it benefits their customers to use the free network.

"The viability of Republic Wireless and others like them comes down to the ratio of data usage on their WiFi networks (home and office) versus on the MNO's network," Bluestein writes in an email to Light Reading. For Republic, it's about 70% WiFi to 30% cellular. That's how it can maintain its business model, Bluestein says. "They're just passing along the savings of WiFi, and building a business model around it."

Scratching the surface of WiFi
Cellular fallback is an option for Scratch Wireless, too, but it's encouraging its customers to stick entirely to WiFi in its bid to offer the first totally free wireless service. The carrier sells the $269 Motorola Photon Q and then there are no other costs -- provided the user stays on WiFi. It's a vastly different model than those MVNOs that are counting on social sharing or ad viewing in exchange for minutes. It's simply free.

For those that do need to go on cellular, Sprint's network is available in day or month passes, but the amounts of data offered are pretty paltry. For example, you can get 25 MB for $1.99 per day, plus $1.99 for an accompanying voice plan, or 200MB of monthly data for $15.99 plus $15.99 for 250 minutes of cellular voice for one month.

According to Scratch's VP of Marketing Jon Finegold, the user base its targeting is young people -- age 24 down to 11 -- that use WiFi a large percent of the time and love the idea of a cell phone, but either don't have one yet or can't lay out $100 per month for the life of the contract. They also tend to use data and text much more than voice, even though Finegold says Scratch's VoIP quality can be even better than on cellular.

Right now, less than two months after its launch, the bulk of Scratch's revenue is coming from device sales, but CEO and co-founder Alan Berrey says it also makes money on cellular usage, as well as "the monetization that goes on in the cellular ecosystem already" through things like browser page loads, app downloads, existing ads, and accessory sales.

"We built the company not to be a little cheaper, but to be free," Berrey says. "We stuck our flag in free and will live in die in free."

The handoff issue
Both Scratch and Republic have had to tweak their service to make it work in a blended WiFi and cellular world. Berrey says that Scratch spent a lot of time and energy in modifying the Android operating system on the Moto Photon Q so that WiFi would run identically as it did on cellular with the same number on both. But, for Scratch, if a customer moves to cellular when chatting on the phone, the call will drop. Finegold claims this isn't an impediment for its customers, since the bar for voice quality has been set so low.

"We didn’t want to make it automatic," Finegold says. "That is another pain point in the cellular industry: not only is it crazy expensive to have a smartphone plan, but you get charged for things you weren’t expecting. We wanted to address that as well."

For Republic, which is pitching more of a WiFi and cellular-combined service, handoff was a priority. The company spent ample time and filed for several patents to improve its handoff process, which it admits was unacceptable in the first iteration of the service. On the Moto X, its latest LTE device, Jim Mulcahy, EVP and general manager of Republic, said they fixed four things: device quality, call quality, MMS support, and voice handoff. (See Republic Wireless Revamps Its WiFi Handoff.)

Handoff was the most tricky. Mulcahy says that existing standards for voice weren't up to snuff yet, plus Sprint operates a CDMA network, so UMA handoff wasn't available. The problem they ran into was that unlicensed spectrum is unpredictable and can be thrown off if the user walks behind a microwave, for example.

So, Mulcahy's team moved the handover to the cloud so that when a call is made, it sits on a server. This allowed them to relax the engineering constraints on how quickly the call had to be handed off. He says it introduced some latency, but Republic's customers haven't noticed or haven't cared.

"One thing that makes Republic so powerful is you don’t have to think about it," Mulcahy says. "It's very important you hit file, hit send, and it just works. I don’t want to think about it because if I do, it creates friction and isn't worth the money."

It's still early days for these startups, but as WiFi gets more attention from operators, vendors, and third parties next year, the hope is that their businesses will continue to get stronger. Will they unseat the tier-one wireless operators? Probably not, but that's not necessarily their goal. Even a niche play is good business in the crowded US market, and with increasing data prices, that niche should continue to grow.

"Regardless of your service provider -- MNO or MVNO -- chances are if you have a smartphone, you're using WiFi and thereby keeping cost down," Bluestein says. "The quality and availability of WiFi is not only a viable option but I suspect, the more mobile data people use, the more they're using or should be using WiFi."

— Sarah Reedy, Senior Editor, Light Reading

(10)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
buzzkill2000
50%
50%
buzzkill2000,
User Rank: Light Beer
10/18/2014 | 8:56:17 AM
why don't Republic Wireless do BYOD
Why do alternative carriers like Repbulic or Scratch limit you to one or two smartphones ?

Why not do BYOD ?

They'd get lot more subs if they did the iPhone.

iOS 8 now supports native VoWi-Fi with its "dialler" .. so iPhones and iPAD air 2's can now be programmed to connect to Republic's VoIP (IMS) back end . 
walliby
50%
50%
walliby,
User Rank: Light Beer
1/13/2014 | 8:27:17 PM
Happy customer
I switched from ATT a couple months ago and couldnt be happier. Republic wireless has a great phone, great price, great service. Make the switch and use the below referral code to get $19 off!

http://referrals.republicwireless.com/a/clk/1tktLx
ClausHetting
50%
50%
ClausHetting,
User Rank: Light Beer
1/5/2014 | 3:45:00 PM
Re: HotSpot2 / Passpoint is another tech to watch
I think there are two parts of to the story:

Hotspot 2.0 will really be a game-changer for the telecoms industry if enough players (like MSOs, etc.) can get together to build the right footprint size. There are also many other technical ways to aggregate the Wi-Fi networks there are already there, including the 'free' hotspots, etc. If this part of the industry can find a way to work together (around Hotspot 2.0) then the sky's the limit for how much mobile traffic such a super-Wi-Fi-network could take over. This is quite a real threat to the established mobile industry. Add to this the fact that huge numbers of new Wi-Fi access points are being added every day. 

The second part of to the story is that 'seamless' access to Wi-Fi (meaning something akin to cellular services) is achievable in many other ways than Hotspot 2.0. It can be done relatlvely easliy using apps and centralised forms of aggregation. But 'seamless also comes in many forms. The most complex is having no service disruption for e.g. VoiP, but many applications are increasingly robust against dropping the session. In any case, 'real mobility' is often not needed at all, because people tend to stand still when consuming data.

For this and a lot more - come to the Wi-Fi Offload Summit this month in Frankfurt! :-)
scottbarstow
50%
50%
scottbarstow,
User Rank: Light Beer
12/31/2013 | 9:40:00 AM
Re: HotSpot2 / Passpoint is another tech to watch
Yes, saw Boingo on there as well as Ruckus Wireless who are doing some great things in HS 2.  

Remains to be seen when / if we can get access points to do the kind of seamless handoff that we for the most part get in the cellular world.
scottbarstow
50%
50%
scottbarstow,
User Rank: Light Beer
12/31/2013 | 9:40:00 AM
Re: HotSpot2 / Passpoint is another tech to watch
Yes, saw Boingo on there as well as Ruckus Wireless who are doing some great things in HS 2.  

Remains to be seen when / if we can get access points to do the kind of seamless handoff that we for the most part get in the cellular world.
Sarah Thomas
50%
50%
Sarah Thomas,
User Rank: Blogger
12/30/2013 | 5:51:27 PM
Re: HotSpot2 / Passpoint is another tech to watch
Thanks for the feedback, Scott. I agree on the potential for Hotspot 2.0. That's why a few of the movers and shakers, like Derek from Boingo, made our list. I'll be curious to see how operator tests are going at O'Hare where they are doing the first really big testbed. Having ubiquitious WiFi outdoors AND seamless handoff and authentication would be a game changer.
scottbarstow
50%
50%
scottbarstow,
User Rank: Light Beer
12/30/2013 | 5:16:03 PM
HotSpot2 / Passpoint is another tech to watch
I have enjoyed your series of articles on the movers and shakers in Wireless the last few days / weeks.  In the interest of full disclosure, I work for Bandwidth, the parent company of Republic Wireless.

As we begin to see massive deployments by municipalities for Wifi (New York, Charlotte, LA) by both incumbent carriers and the cable companies, your experience of walking down the street and being on Wifi will start to become a reality.  With the advent of Hotspot2, we will begin to see roaming consortiums for WiFi just as we do for cellular, and your HotSpot2 credentials will push the negotiation for onboarding you onto various networks down to the device instead of you having to opt in to all of these disparate networks as a user.

While we are a ways from massive HotSpot 2 adoption, we are seeing the early, small waves right now.  I believe 2014 will be a year where we begin to understand what this new protocol represents for Wifi as a technology.

 
SteveC10101
50%
50%
SteveC10101,
User Rank: Light Beer
12/30/2013 | 11:56:01 AM
Re: Republic Wireless ROCKS
The Defy Beta test was rough I heard and a lot of people were soured on Republic because of that phone. Plus the transfer from WiFi to Sprint Cell would cause a lot of dropped calls. That's not the case anymore. I can't tell a bit of difference between the service that I had with Verizon and Republic. I was very skeptical but all of the info that I had found seemed to be pretty positive with the exception of the beta users.

The $299 price for the Moto X with Republic is incredible. I couldn't find anything close to it with the exception of having to sign a two year contract. Republic can't be making much on that phone. They are banking on the fact that people will try and love the service. I sure do. Thanks for your review! Happy Holidays!
Sarah Thomas
100%
0%
Sarah Thomas,
User Rank: Blogger
12/30/2013 | 11:36:51 AM
Re: Republic Wireless ROCKS
Thanks for the feedback, Steve. Good to hear the service works much better on the Moto X. I think it's interesting they also offer a 3G or 4G plan, so not necessarily both. I'll be curious to hear how many people choose each once (or if) they release those stats.
SteveC10101
100%
0%
SteveC10101,
User Rank: Light Beer
12/30/2013 | 10:56:05 AM
Republic Wireless ROCKS
I switched to Republic Wireless a few months back from Verizon. They were killing me with the monthly charges. Around $120 a month. Verizon does have the best 4G coverage. I won't deny that. I got the Republic plan for $25 a month. Unlimited calls, text and data with 3G. I dont have the 4G on my plan. It takes a few seconds longer for the internet to load compared to Verizon. But for $100 a month savings its well worth it. If you get the 4G with Republic remember you might not have use of it except in large cities. Im completely happy with the plan I have. I have no dropped calls. The switch from wifi to Sprint 3G is seamless. Those commercials for Verizon that show the map show the 4G map coverage only and 3G is pretty much everywhere so their ads are really misleading. It works great. Get the Moto X phone and not the Defy (it sucks). The Moto X rocks. Yes, you will have to pay $299 for the phone upfront but it pays for itself in a few months. Do the math and figure out your yearly cost compared with your current plan. Even if you have to pay an early termination fee it will save you money over the next year or two. I have a link that you can use to save $19 for the first month. Yes, it helps me with my bill too when you do. I won't lie. For Christmas bonus my boss decided to let most of us go and I am unemployed. If you don't like Republic, there is no contract. Just switch back. It is a great company.

 

Here is the link. Cut and paste if it needed. Thanks!!

 

http://referrals.republicwireless.com/a/clk/1ymPvN

 

 
Educational Resources
sponsor supplied content
Educational Resources Archive
From The Founder
Download our complete guide to de-risking NFV deployment in 2016, including:
  • An eight-step strategy to deploying NFV safely, based on input from the companies that have already started virtualizing their production networks.
  • Interviews with leading executives at Colt, AT&T, Deutsche Telekom, Cisco, Nokia, ZTE, Ericsson and Heavy Reading.
  • Flash Poll
    Live Streaming Video
    Prepping for the Future: Upskill U Explained
    During this short kick-off video, Doug Webster, Vice President of Service Provider Marketing, Cisco, and Light Reading’s CEO & Founder Steve Saunders give an overview of Upskill U.
    LRTV Huawei Video Resource Center
    Digital Operation Transformation Roundtable Wrap-Up

    5|6|16   |     |   (0) comments


    Industry leaders at the Digital Operation Transformation Summit give their final thoughts at the roundtable.
    LRTV Huawei Video Resource Center
    Peter Sany on Digital Transformation

    5|6|16   |     |   (0) comments


    Peter Sany gives his view on digital transformation at the DOT Summit in Barcelona.
    LRTV Huawei Video Resource Center
    James McQuivey on Digital Transformation

    5|6|16   |     |   (0) comments


    James McQuivey gives his view on digital transformation at the DOT Summit in Barcelona.
    LRTV Interviews
    Courting the Apartment Crowd

    5|6|16   |     |   (0) comments


    In this LRTV interview, AT&T's Adrian Cardwell details the changing dynamics of the MDU markets and explains how AT&T is pursuing apartment dwellers with GigaPower.
    LRTV Interviews
    Demand Surges for On-Demand Ads

    5|5|16   |     |   (0) comments


    Ed Knudson, VP, Product and Strategy at Canoe Ventures, discusses the rising appeal of VoD ads and the challenges on inserting ads dynamically in live TV programming.
    LRTV Custom TV
    Exclusive: Video Interview With Sckipio CEO David Baum

    5|5|16   |     |   (0) comments


    At his headquarters in Tel Aviv, G.fast visionary David Baum, CEO of Sckipio, provided an exclusive interview to Light Reading and showed how innovations in rate and reach, vector densities, fast reconnecting times and SFP-based residential gateways are expanding the potential of G.fast.
    Telecom Innovators Video Showcase
    Atrinet's NetACE – Migration to NFV & SDN With NetOps-Driven LSO

    5|4|16   |     |   (0) comments


    At Atrinet's headquarters, Ray Le Maistre sits down with Roy Silon to get an in-depth look into the company's focus and the secret recipe for their success.
    LRTV Huawei Video Resource Center
    Amsterdam ArenA, Powered by Huawei

    5|4|16   |     |   (0) comments


    Huawei's ICT solutions power the state-of-the-art Amsterdam ArenA, turning it into a smart stadium.
    LRTV Interviews
    Testing When There's No 'There' There

    5|4|16   |     |   (1) comment


    The benefits of SDN/NFV are well known, but the transition comes with some challenges, prominent among them is: how do you test a network that has been abstracted and has the potential to be endlessly reconfigurable? Light Reading was at NFV World Congress in Santa Clara, Calif., where we bumped into Mats Nordlund, CEO and co-founder of Netrounds, a Swedish ...
    LRTV Interviews
    Ditching the Slash & the Orchestration Wars

    5|3|16   |     |   (2) comments


    SDN and NFV have been inextricably bound with each other for so long that on a conceptual level, smooshing them together into one catch-all phrase – SDNFV – is now justifiable, according to Dan Pitt, executive director of the Open Networking Foundation (ONF). Light Reading spoke to Pitt at the NFV World Congress, where he explained that the next ...
    LRTV Custom TV
    ZTE TV Connect Highlights

    5|3|16   |     |   (0) comments


    ZTE gives us a tour of its booth and new products at TV Connect in London.
    LRTV Custom TV
    Deluxe's Unified Delivery Solution

    5|3|16   |     |   (0) comments


    Join Alan Breznick of Light Reading and visit the Deluxe booth at NAB! Here you'll find Deluxe's Unified Delivery Solution, OTT video, virtual reality, HDR, 4K and much more!
    Upcoming Live Events
    May 23, 2016, Austin, TX
    May 23, 2016, Austin Convention Center
    May 24-25, 2016, Austin Convention Center, Austin, TX
    September 13-14, 2016, The Curtis Hotel, Denver, CO
    December 6-8, 2016,
    June 16-18, 2017, Austin Convention Center, Austin, TX
    All Upcoming Live Events
    Infographics
    A new survey conducted by Heavy Reading and TM Forum shows that CSPs around the world see the move to digital operations as a necessary part of their overall virtualization strategies.
    Hot Topics
    Sprint CEO: Our Spectrum Is for 5G
    Dan Jones, Mobile Editor, 5/3/2016
    Amazon & Other 'Big 4' Cloud Providers Crushing Competitors
    Mitch Wagner, West Coast Bureau Chief, Light Reading, 4/29/2016
    Showdown at the OpenStack Corral
    Carol Wilson, Editor-at-large, 5/3/2016
    Upskill U Kicks Off IoT Lectures With Ericsson
    Kelsey Kusterer Ziser, Editor, 5/4/2016
    WiCipedia: 'Meternity,' Lemonade & Chores
    Eryn Leavens, Special Features & Copy Editor, 5/6/2016
    Like Us on Facebook
    Twitter Feed
    BETWEEN THE CEOs - Executive Interviews
    In this latest installment of the CEO Chat series, Craig Labovitz, co-founder and CEO of Deepfield, sits down with Light Reading's Steve Saunders in Light Reading's New York City office to discuss how Deepfield fits in with the big data trend and more.
    Grant van Rooyen, president and CEO of Cologix, sits down with Steve Saunders, founder and CEO of Light Reading, in the vendor's New Jersey facility to offer an inside look at the company's success story and discuss the importance of security in the telecom industry.
    Animals with Phones
    Sloth Mail Click Here
    Sloth mail -- somehow even slower than snail mail.
    Live Digital Audio

    Of all the tech companies in the Valley, Intel has made the most aggressive commitment to building a diverse and inclusive workplace culture. It's doing so by taking concrete, measurable steps, making a large financial investment and through a commitment to complete transparency about its progress. In this radio show, WiC Director Sarah Thomas will be joined by Shlomit Weiss, Intel's Vice President, Data Center Group, and General Manager of Networking Engineering, who will share with us why Intel is tackling this huge challenge, how and to what effect. She will also discuss her unique experiences leading development of Client SOC development in the past and today leading development of all of the chipmaker's silicon hardware for networking IPs and discrete devices and managing a team of 600 engineers across Israel, Europe and the US.