A recent WSJ article (subscription required) by Ryan Knutson begins with the provocative question “Do you really need a wireless phone company?” A few sentences later he notes that while “[i]t is almost impossible to imagine life without a cellphone…imagining life without a cellphone bill is getting a lot easier.”
To address his “do we need a wireless phone company” research question, Knutson undertook a one-person experiment. As he explains:
For 30 days beginning in January, I disconnected my iPhone from AT&T Inc. and lived entirely off the free Wi-Fi connections that are available nearly everywhere. It wasn’t exactly seamless…But with a few changes in habits, it was definitely doable…
There is a lot of technical help out there for people trying to cut the wireless link. A $5 app, Wi-Fi Map Pro, shows the locations of nearby hotspots even when your phone is offline, and it provides passwords to some private networks.
Knutson also suggests that a WiFi-only strategy has some benefits in countering what some consider a tendency toward addictive behavior among smartphone users. Noting “the difference between habit and necessity,” he observes that:
After getting used to being unconnected for brief periods, I became less attached to the device itself and found myself checking my phone less often, even when I had service.
Knutson’s WSJ piece also includes some reporting on industry impacts of a shift to “WiFi-only” and “WiFi-first” usage. While I’ll save discussion of this topic for later posts in this series, Knutson’s one-man experiment suggests these impacts could be disruptive, especially for incumbent wireless providers that have invested heavily in spectrum licenses and network infrastructure, and whose business models and stock price are closely tied to the strength of their cash flow margins.
Update: I’d also recommend this NPR interview with Knutson about his WiFi-only experience, especially for anyone unable to access his WSJ article.
In my introductory post on unlicensed spectrum I noted that two small startup companies, Republic Wireless and FreedomPop, are making creative use of that spectrum to offer low cost voice and Internet service.
These two companies were the focus of a mid-February article in the New York Times by Brian Chen. As Chen explains, “FreedomPop and Republic Wireless…offer services that rely primarily on Wi-Fi networks, and in areas without Wi-Fi, customers can pull a signal from regular cell towers.”
FreedomPop, which has 80 employees, offers software that enables smartphones to automatically join Wi-Fi networks…For $5 a month, users can gain access to a network of 10 million Wi-Fi hot spots a month, many of which are normally not open to the public, the company said. FreedomPop’s other low-cost plans use a combination of Wi-Fi hot spots and Sprint’s network. Some basic plans are free.
Republic Wireless…uses a similar approach. For $5 a month, customers can make calls or connect to the Internet solely over Wi-Fi. For $10 a month, they can use both Wi-Fi and a cellular connection from Sprint… Republic Wireless’s parent company, Bandwidth.com, a telecommunications provider with about 400 employees, developed a technique to move calls seamlessly between different Wi-Fi networks and cell towers.
In a Wall Street Journal article (subscription may be required), Ryan Knutson reports that roughly 38% of Republic customers opt for the company’s $10/mo. plan, which provides unlimited voice and text usage via the Sprint network, but uses only WiFi for data. It also offers several other service tiers, as does FreedomPop, whose “basic” service is free and provides 200 voice minutes, 500 text messages and 500 MB of data per month.
At this point it seems likely that these services appeal mainly to very cost-conscious users with the requisite mix of technical skill, time and patience to deal with the kind of complications, glitches and limitations often associated with new technology-based services launched by modestly capitalized startups. Some of these adoption issues are enumerated in a “Complete List of Caveats” available on a Republic Wireless Wiki page, as well as this June 2013 Time magazine article, which advises readers to be “keenly aware of [FreedomPop’s] hidden costs and gotchas,” when they consider signing up for the service.
Knutson describes how David Morken, co-founder of Republic Wireless, “set out to create a cheaper alternative to carriers once he realized he couldn’t afford to pay the cellphone bills for his six children.”
Knutson also points to another company, Scratch Wireless, which employs a somewhat different version of the WiFi-first model. It offers a free WiFi-based service that includes unlimited voice, texting and data. When outside WiFi coverage areas, texting is still free, and voice and data service delivered via the Sprint network can be purchased on a daily or monthly basis. Daily passes for unlimited voice or data cost $1.99 each, and the company offers monthly “passes” with either capped or unlimited use. To use the Scratch service, customers need to purchase a $99 Motorola Android smartphone.
As the following promotional video suggests, Scratch’s primary target audience appears to be the same cost-conscious millennials that comprise the largest share of cable TV “cord-cutters” and “cord-nevers.” According to the video, Scratch believes “wireless should be free. Why? Because it can be.”
Chen describes Republic and FreedomPop as “tiny,” with “customers…in the hundreds of thousands,” a small fraction of the more than 100 million served by both Verizon and AT&T. But, according to Knutson, Republic, which “has several hundred thousand subscribers,…is growing by about 14% a month.”
Chen highlights a key point, that both Republic and FreedomPop claim to be profitable, even with their very low prices and modest suscriber bases.
This ability to profitably deliver voice and Internet service at price points in the $5-$20/month range highlights the potentially disruptive nature of a “WiFi-first, cellular-second” business model.
Though these small startups may never expand to the point where they have major impacts on wireless industry dynamics, such impacts may nevertheless be on the horizon, as firms with more substantial resources and market positions also seek to leverage the cost-savings and other benefits of unlicensed spectrum. These companies and their plans will be the focus of future posts in this series.
With the FCC taking multiple steps to expand the availability of unlicensed spectrum amid growing user reliance on untethered connectivity, the role and importance of this spectrum in the U.S. context is expanding and likely to expand further.
This evolving dynamic will be the topic of a series of posts, starting with this introduction. We hope it will trigger comments from experts and other interested parties in the U.S., and also from those who can draw comparisons with other countries and regions of the world.
Among the manifestations of this shift are new types of wireless service providers, including small startups like Republic Wireless and FreedomPop, large and well-established cable operators like Cablevision and Comcast, as well as municipalities and even local neighborhood groups. And, if industry rumors are correct, this expanding group will soon include Google, which is already providing disruptive competition in the wireline sector by deploying high capacity fiber optic networks in an expanding number of U.S. cities.
While these efforts differ in key respects (which will be discussed in future posts), what they have in common is that they are responding to a convergence of multiple factors, including:
These developments seem to bode well for an expansion of competitive options in the wireless connectivity sector, though it remains to be seen if and how they will impact dynamics in the wireline sector, where the lack of competitive options is most severe.
In future posts I’ll be discussing in more detail the trends, players, issues and implications related to the evolving role of unlicensed spectrum in the U.S. communication sector. As noted above, comments are welcome, including those drawing comparisons with unlicensed spectrum developments in other nations and regions of the world.
We had a brief interview with Professor Charles Steinfield before a seminar he presented on the role of information and communication technologies for development, focusing on their role in the agricultural context. Distilling key lessons learned from his field research with Professor Susan Wyche, he touches on the kinds of technologies being used, the implications of their use, and the barriers to further success. This brief overview conveys the substantive areas he addressed in more depth in the seminar that followed. See the short video at: https://vimeo.com/110827930
Professor Steinfield’s work is supported by USAID, which funds MSU’s Global Center for Food Systems Innovation (GCFSI). A copy of his report with Susan Wyche on ICTs and development is available from the GCFSI web site at http://gcfsi.isp.msu.edu.
The Quello Center has just released a report on ‘Mobile Today and Tomorrow’ by a team of researchers from the Quello Center, Oxford Consulting, and Huawei Technologies. It explores trends in mobile and speculates on future developments. It is anchored in a review of literature, and a set of interviews with leading experts in many aspects of mobile technology, use and policy. It differs from many other overviews in being based on a social science perspective on mobile and striving to be global in its perspective. We invite comments and recommendations on this report and directions for taking further research. The paper is free online as:
Dutton, William H. and Law, Ginette and Groselj, Darja and Hangler, Frank and Vidan, Gili and CHENG, Lin and LU, Xiaobin and ZHI, Hui and ZHAO, Qiyong and WANG, Bin, Mobile Communication Today and Tomorrow (December 4, 2014). A Quello Policy Research Paper, Quello Center, Michigan State University.. Available at SSRN: http://ssrn.com/abstract=2534236
The exponential diffusion of mobile communication across Uganda, and much of the developing world at large, has led mobile to become a testing ground for various ICT agriculture services delivered. Unfortunately, the majority of these early services usually require farmers to follow a strict syntax in order to register and the information is most often provided exclusively in English. Not surprisingly, a majority of the farmers are not sufficiently literate in English to benefit from these services, which dramatically undermines the effectiveness of these services. Against that background, we developed and field tested a mobile-based platform that enables farmers to use their basic mobile phones and to interact with their respective extension agents in their own local languages.
We believe this simple approach has major implications for policy and practice across the developing world. For more information about our study, you can find my paper on SSRN at: http://ssrn.com/abstract=2518170.
Quello Center, MSU