David Morken admits that the promise he made to reward his kids with iPhones if they brought home straight A's was no stroke of genius. But the business concept inspired by the ensuing $1,000-plus phone bills may well turn out to be.
Launched nationally in December 2012, Morken's brainchild, Republic Wireless, is a $19-per-month voice, text and data service that relies on Wi-Fi as its primary network. When Wi-Fi isn't accessible--roughly 40 percent of the time for Republic customers, according to Morken--calls automatically bounce to Sprint's 3G cellular network.
The pillar of the low-cost Republic model is a solid but no-frills Android handset, the Motorola Defy XT, which allows Republic to offer a low-cost, contract-free wireless service package with unlimited voice, data and texting after paying an initial $249 for the phone.
The Disruptors: 2013
Company: Republic Wireless
Big idea: A hotspot-enabled voice service
In taking on the $178 billion wireless industry, Morken is counting on customers to flock because they already rely on Wi-Fi at home, at the office and in an increasing number of public and private spaces. "The future of mobile technology and the essence of the smartphone, I believe, is Wi-Fi," he says. "It will continue to eat the world because it's so much cheaper."
Turns out Morken's vision of Wi-Fi dominance may be closer than you think. The Wireless Broadband Alliance predicts that the number of hotspot deployments globally will nearly triple between 2012 and 2015--fortifying a reach that Morken says is broad enough to make the Republic model viable. Already, Republic customers can be linked in automatically to 11 million public hotspots using the company's Wi-Fi+ app.
Republic's model, observes technology industry analyst Jeff Kagan, "is innovative, but there are trade-offs for the customer because all the kinks haven't been worked out yet." Indeed, Republic's unique value proposition also happens to be its weakest link, at least for now: At times users must contend with interrupted calls stemming from a less-than-seamless Wi-Fi-to-cellular handoff.
But that hasn't stopped Republic Wireless from signing up "tens of thousands" of new customers each month, according to Morken, suggesting that mobile phone users are willing to live with those shortcomings. And he vows that they won't have to for much longer; by early fall, the company plans to unveil updated software that he expects will largely resolve the handover issue. Republic will also add two more Android handset options.
Morken says he expects those improvements to attract more first-time smartphone users--the college students, cost-conscious Millennials, bargain hunters and land-line cord-cutters who comprise the bulk of Republic's customer base. But what he really wants is for Republic to be the carrier that breaks the stranglehold on the wireless market held by Verizon, AT&T, T-Mobile and Sprint.
"We can't outspend the major carriers," he acknowledges, "so this is going to have to stand on value." And that's a concept we can all agree is most welcome in today's mobile world.