Ultra-cheap $19 Republic Wireless service opens back up
Republic CEO David Morken compares the demand for his service to the fans who wait in front of Apple stores waiting for the next big thing.
The company garnered headlines and a lot of buzz for its plans when it launched a year ago, and consumers likewise gravitated toward the service -- the service provider had to shut its beta trial shortly after it opened up because of a surge of demand.
Republic Wireless, which buys and resells capacity from Sprint Nextel's network, is able to deliver such a low-priced service because it's betting that users will stay on Wi-Fi networks for a majority of their usage. The company has spent the last year testing out that thesis, and CEO David Morken told CNET he is confident his beliefs hold up.
"The most important thing we got out of the last year of learning was this Wi-Fi-first wireless approach is a strategy that will work and work well," Morken said.
Next month, Republic Wireless will fully launch with general availability and a quicker delivery time for the Defy.
Republic Wireless is one of the more unique wireless resellers to come around. Like some of the other successful ones, it's banking its success on an ultra-competitive price. But it's the first to use Wi-Fi as a way of offsetting the cost of running a wireless service.
Republic Wireless officially enters the business in decent financial shape. The company is both profitable and free cash-flow positive, and is expected to generate more than $100 million in revenue.
Originally, 5,000 customers signed up for the beta last year, and Morken said he expects to surpass 50,000 customers this year. By next year, he expects to hit 500,000 customers and double revenue.
His expectations are based on the demand he is seeing from consumers, which remains strong even as a lot of the buzz from a year ago has faded. Morken compares the wait list of people online to fans who wait in front of Apple's stores in anticipation of the next product.
"The proof and validation is when you open the store and people come flying through the doors," he said about Republic Wireless' virtual storefront. (It has no physical one.)
Republic Wireless learned some other lessons about the ability to scale the service to handle more people, bulk up the sales staff, and other means of improving execution, Morken said. From the trials, he is seeing Wi-Fi usage rise, giving him confidence that few consumers will abuse the system and stay on the cellular network. In order to work financially, consumers will have to stay on Wi-Fi most of the time, because Republic Wireless pays Sprint for any customers who use the cellular network.
Because the service relies on hand-offs between the Wi-Fi and cellular networks, call drops are frequent, CNET's Rick Broida found. Morken said the company was working on a more seamless transition, but noted that many consumers find ways to work around the Wi-Fi-cellular hand-off issue.
For now, the Motorola Defy XT, at $249 (plus $10 activation fee), is the only smartphone available on the service. Morken said the company is working to expand its portfolio to at least have a good, better, and best approach. He added he was open to the possibility of letting people bring their own unlocked smartphone to the service, but wouldn't comment on timing.
There were a lot of skeptics about Republic Wireless when it first launched. Morken is out to prove them wrong.
"It would be silly for us to pursue this...if it wasn't going to be a profitable model or valuable to people," he said.