At $19 a month without a contract for unlimited voice, text, and data, you'd think subscribers to Republic Wireless wouldn't have a lot to complain about. There was one aspect about the carrier, though, that bugged them a great deal: the cost of joining "the republic."
A new subscriber has to pay full price—$249—for the mid-level Motorola Defy XT smartphone (shown above) that is modified to work on Republic's network.
The reason Republic Wireless can offer such rock-bottom rates for unlimited wireless phone service is that it expects its subscribers to make most of their calls on a Wi-Fi network.
The one phone the company offers makes calls on the cellular grid and the company supports wireless calling through its partner Sprint, but its business model is based on its subscribers using Wi-Fi most of the time.
That model appears to be working well for the company. One hang-up, though, appears to be the cost of entry into the system. That changed this week, however, when the company announced that new subscribers and subscribers who want to add another account could buy the Motorola model for $99.
There's a catch, though. Your monthly tab will jump to $29 if you take advantage of the $99 phone offer.
Upfront spending unpopular
"We consistently heard from a significant number of people that they liked the idea of $19 a month without a contract, but they didn't want to spend the $249 up front," Republic Wireless CEO David Morken said in an interview.
Along with the $99 deal, subscribers receive a $50 Google Store card offered by Motorola, effectively reducing the initial price of the phone to $49, Morken added.
Charging $99 for the phone can be risky, he said. Since there's no contract or early termination fees, "they (subscribers) can cancel service, and we'll have to eat the difference."
"We're taking the risk that they won't cancel right away," Morken said. "That may sound crazy but, based on our last year and half of experience, we believe most folks will stay with us to make this offer make sense."
A disincentive for leaving the network is that the phone loses its cellular connectivity. It will still work as Wi-Fi device, but its phone capabilities will be disabled.
Another irritant in the current network set-up is what happens when you move from Wi-Fi to cellular on the same call. The call is dropped and then immediately auto-dialed on the cellular network.
That problem will be addressed in the next generation of Republic Wireless phones expected at the end of August. "We have it working seamlessly in the lab," Morken said.
He noted that the August phone line-up will include three models at three price points. The high-end phone Republic will offer will be something in the same category as the Samsung Galaxy S III.
A surprising use of Republic's network has been its use by international travelers, he added. "As long as you can get a Wi-Fi connection, you can call your family and friends, and they can call you, all for $19 a month," he said.
This story, "Republic Wireless lowers ante for its cheap unlimited voice, text, data service" was originally published by TechHive.