Some of the cheapest carriers suddenly look expensive. MetroPCS charges a very reasonable $50 per month for unlimited voice, data and texts. And Virgin Mobile costs $35 per month for unlimited 3G and 4G, 300 voice minutes and unlimited texts. Republic Wireless blows them all away. This wireless upstart, which just opened its virtual doors to the public, charges just $19 per month for unlimited voice, data and texts. We know what you’re thinking: How can they do that? And what’s the catch?
To answer the first question, the North Carolina-based Republic Wireless counts on its customers to use mostly Wi-Fi in the home, office or public hotspots. When you’re outside of Wi-Fi range, calls switch over to Sprint’s network, though for now you’re limited to 3G speeds. The company’s first phone is the Motorola Defy XT (available for $249), and more handsets are on the way.
Republic Wireless isn’t stopping there. CEO David Morken told LAPTOP that he plans to tap into Sprint’s 4G LTE network–without raising costs–and that he’s working on an app to bring Republic Wireless’ service to more devices. Check out our in-depth Q&A, and stay tuned for a full review.
LAPTOP: What was the response to Republic Wireless’ pre-order push?
David Morken: We had the biggest day of our 13-year history as a company. Republic Wireless is a much younger division, but just an awesome day, awesome 24 hours of watching orders in what is essentially the online equivalent of folks lining up outside of a retail establishment like an Apple store. So that’s been a lot of fun.
LAPTOP: Is the service truly unlimited?
DM: The most important aspect of the service is that it is truly not throttled, not limited, not tiered. It is unlimited and $19 a month. That’s probably the biggest, most important pillar in the value prop for the buying public that we’re seeing in what is kind of a severe economic time. So for $19 a month, you can never use Wi-Fi, and you’ll still have an unlimited handset.
LAPTOP: So how can you afford to offer a $19 plan?
DM: The fact is that our entire subscriber base is excited about using Wi-Fi first, and that’s why we’re able to go to market with such a disruptive offer, because the preponderance of subscribers choose voluntarily to use their own, credentialed Wi-Fi environments at home and in the office. And they do so a substantial majority of the time. So $19 a month unlimited, yes, it uses Wi-Fi first and Sprint when you’re not in Wi-Fi. During the last year we’ve learned an enormous amount, and what we’re excited about now is that we are fully open to the public.
So we’re not doing anything unique with compression, and we’re not changing the experience for the heaviest cellular users in our base. Everyone enjoys truly unlimited service.
LAPTOP: Has anyone abused the fact that you don’t have a cap?
DM: We haven’t kicked a single subscriber off of the network the entire history of the product, and we don’t intend to. Republic was the very first one to let you dial or text natively without downloading apps to do so. And a substantial majority of our users’ time [spent] using their handsets is over Wi-Fi. And that’s without us forcing them to do so. We don’t lock the Wi-Fi radio on. You can turn it off. But you don’t need the cellular network most of the time. Why pay for it?
LAPTOP: Does your phone automatically sniff out and connect to Wi-Fi networks any better than or more efficiently than a traditional Android handset?
DM: Yes. Once you credential login to your home Wi-Fi and your office Wi-Fi or any other Wi-Fi that’s secure, the handset remembers that. And the next time you’re in that environment, it will automatically send and receive calls and text messages over Wi-Fi. There’s a nice little visual indicator in the upper left with a green arc that tells you quite clearly when you’re doing your communications over Wi-Fi. We also have a terrific partnership with DeviceScape. DeviceScape is a crowd-sourced hotspot aggregation app on the handset, which optimizes your Wi-Fi when available in a network. So that’s another way that we extend your reach over Wi-Fi.
LAPTOP: We’ve heard some complaints about hand-offs between Wi-Fi and cellular. Is that something you’re working on?
DM: It is. It is the second most-asked-for refinement in the service. The No. 1 was, “Please open the Republic.” And that’s what we achieved.
LAPTOP: What’s the third most-asked-for refinement?
DM: Probably overall quality when you’re talking, and I think the best news is, No. 3 is not billing. And that’s a really important point. The vast majority of customer issues with wireless carriers, when you look at the number of tickets a customer opens, are dealing with billing. We have almost no questions whatsoever about billing, because it’s $19 this month, it’s $19 next month. It doesn’t matter if you use Spotify or Pandora or download complex architectural plans for some reason on site. It’s always $19. So I guess perhaps the most important customer issue is what is not an issue.
LAPTOP: How did you decide to make Motorola your first handset partner?
DM: What’s so important is tightly collaborating with the manufacturer. You’re talking about a hybrid calling, Wi-Fi-centric model, and you really have to get it right on the device. And so the collaboration with Motorola, with their team, was the No. 1 driver. We had terrific chemistry, wonderful buy-in by their team, and we sprinted with them as fast as we could to get our hybrid calling native in the device. And so it was the people, it was the execution. We did fly across oceans and pursue other opportunities in other countries, but Motorola won the race and has been terrific.
LAPTOP: Assuming that you’re going to roll out more devices other than the Defy, will you be going for a good, better, best approach?
DM: We think it’s important to have a portfolio. We think it’s important that we offer something that’s tremendous on the lower end of the price point. I would love to offer a $49, compelling smartphone and a $19-a-month plan that is robust and Android-based and delivers. I think that what you described is exactly right. That on a good, better, best, this is clearly when you compare to the very highest end of the market a great phone, but not the greatest phone.
LAPTOP: Why should potential customers trust that Republic Wireless is going to stay in business long enough for the user to reap the rewards?
DM: We are a 13-year-old organized success. We’ll do close to $150 million in revenue in 2012, and we have a nationwide network that is the 6th-largest phone network across the country, as measured by phone numbers and production. So we have 30 million-plus phone numbers and production. We power folks like Google Voice and Skype and many terrific new providers such as GroupMe, for example, and others.
Republic is new in that it only began its life publicly in November of 2011, but I will tell you that 5 years of developing call-flow control in the cloud through products such as Phone Booth that we developed and a nationwide network that’ll do not just 30 million phone numbers but 15 billion minutes of traffic and billions of SMS messages a month have all added up to allow us to be able to offer Republic.
LAPTOP: As Sprint rolls out its 4G network, do you have plans to offer a 4G tier of your service?
DM: 4G and LTE are part of our roadmap and are important user expectations we intend to meet. Sprint has been a tremendous partner, and I’m super confident in our relationship with them. So yes, both of those are in our future.
LAPTOP: Would it be safe to say that 4G would be at a higher price, or can you keep the fee as low as $19?
DM: I’m confident in the $19 value prop position, and our entire team is focused on preserving that going forward.
LAPTOP: Do you have any plans to expand into tablets?
DM: Yeah, I’m driving a Nexus 7 tablet right now, and frankly, between you and me, if our Republic Wireless app were done for that device, I would probably be using it as my primary communications device. And that’s just me, I’m probably a novel user or early adopter or whatever you want to call it. I’m with you, and we do have an app strategy on our roadmap.
LAPTOP: What’s your ultimate goal for Republic Wireless, and is there a big enough audience for you to succeed?
DM: We’re kind of the kid on the side of the road pointing at the emperor saying, “Wait a minute, Wi-Fi is everywhere, what are we doing? Let’s get a handset, and let’s partner with a manufacturer and really optimize the experience on the handset to make it affordable so the payback at $19 a month pays for the handset very quickly.” So there’s no subsidies for handsets. Let’s pay back the user very quickly and make the total cost of ownership really accessible for the next 100 million smartphone users in the U.S.