How to text without a cell phone

Kids, of course, come in all varieties, and their interests run the gamut. But when it comes to 10-year-old girls, I dare say, there are two ubiquitous desires: getting one's ears pierced and getting a cell phone.

And you may as well let go of that ol' school stereotype of a preteen--phone glued to ear, gabbing on and on with friends about inanities--the phone is not really for talking. It's for texting.

This is why my own 10-year-old daughter--too young in her stodgy mom's eyes for piercings or a cell phone--was ecstatic to have found a work-around for the latter. Earlier this summer, a friend told her about an app for her iPod Touch called Textfree, which assigns her a real phone number, and lets her send and receive texts for free.

In other words, "She's in," said Pinger CEO and co-founder Greg Woock, whose company makes the Textfree app and who, too, has a 10-year-old daughter. "If you have a phone number, now you're cool, even if you don't have a phone. No one knows you don't have a phone."

And the trade-offs are minor, especially by the standards of a 10-year-old. To text, she needs to be connected to Wi-Fi (which she says "is basically everywhere"), and she needs to deal with ads bannered across the bottom of the app. (She says she doesn't "even notice.")

So my now-cool daughter, at the very least, is helping illustrate a trend among tweens who are turning their iPods into texting devices. Unbeknownst to her, however, she might also be helping shake up traditional wireless-carrier models as we know them.

In the roughly two months since users of Pinger's Textfree app started getting assigned actual phone numbers, Pinger has handed out 1.6 million. That's as many wireless numbers as AT&T gave out to net new subscribers in April, May, and June, according to the company's second-quarter filing. Pinger is now sending out about 630 million text messages per month; 70 percent of those are sent from iPod Touches, and 30 percent are sent from iPhones. The median age of the app's users is 18.

Textfree is one of a handful of mobile-texting apps that you can find in Apple's App Store, Gogii's TextPlus among the higher-ranked ones. But only Textfree (for now, anyway) hands out an actual phone number, which can later be ported, as required by law. Other apps send texts from an e-mail or short code.

The handing out of phone numbers was part of Pinger's preannounced plan to start offering voice-calling options--"Textfree with Voice"--slated for a beta launch at the end of September. Users will have the option to pay for voice minutes, or they can earn minutes by doing things like downloading free apps, filling out surveys, or performing other tasks that don't seem to bother youth already accustomed to having their consumer habits tracked.

In other words, using Wi-Fi on her iPod Touch (along with microphone-equipped earbuds), my daughter will be able to actually call and talk to me. And an iPhone customer--say, a college student like Woock's son, who's grown accustomed to getting everything for free--could use his Textfree phone number as an extra one that doesn't cost anything to use.

Textfree's model is not earthshaking, in that similar services are also offered through the likes of Skype mobile or Google Voice. But will it disrupt wireless carriers accustomed to their profitable texting fees? The verdict is still out.

Carrier consequences
AT&T declined to comment for this story. And a Verizon Wireless representative said the company is aware of Textfree but that it's too early in the game to draw any conclusions about the impacts of it and other such free texting apps. She did, however, offer figures to illustrate the growth in texting. Verizon customers sent 180 billion text messages in the second quarter of 2010, versus 148 billion in the same quarter in 2009.

In Pinger's own surveying, it has found that about half of those using Textfree on an iPhone have reduced or turned off their texting plan. But the company maintains that its business is still a net win for the carriers, who haven't yet called to complain.

"If they actually look at the math, we are very net-positive for them," Woock said. Of the roughly 22 million messages Textfree sends out each day, about 14 million today are sent to paying phone customers. And then those customers reply, he said. Same goes for Textfree with Voice.

"When your daughter makes a phone call to another person who has a cell phone, that person is going to pay for the minutes. Now the carrier wins not just on texting, but on voice minutes too," he said.

Forrester Research Principal Analyst Charles Golvin says the tween market for apps like Textfree used on an iPod Touch is worth watching, particularly if the ads served are meaningful and relevant. But he doesn't see consumers who can afford an iPhone and its required data package "pinching pennies" to use free texting apps to save mere dollars on their monthly bills. (AT&T charges iPhone users $20 for unlimited texts and $5 for 200.)

The overall trend, however, shows how we're moving toward a future in which the type of communication--be it text, voice mail, phone calls, e-mail--won't matter. "It will all be just a bunch of bits flowing," Golvin said.

Nielsen senior researcher Roger Entner said any impact free texting apps are having on carriers isn't showing up in the numbers. But he also recognizes the power of something like Textfree for teens, for whom the texting numbers "are staggering."

Entner pointed to recent Nielsen research showing that U.S. teenagers are using 3,146 messages a month, which translates to more than 10 messages every hour of the month that they are not sleeping or in school. Even tweens under 12, he added, are sending 1,146 messages per month, which is almost four text messages per waking hour that they are not at school.

Getting data from the under-12 set is difficult for researchers and carriers because they aren't allowed to be surveyed without parental permission, and they don't show up in the phone bill data.

However, Pinger's own user registration data offers a pretty specific illustration. The majority of its users, 28 percent, fall in the 18-to-22 age range; 18 percent are 15 to 17 years old; 18 percent are 12 to 14 years old; 10 percent are 11 or under; 10 percent are 23 to 28 years old; 6 percent are 29 to 34; 7 percent are 35 to 49; and 3 percent are 50 and over.

Answering the call
San Jose, Calif.-based Pinger was founded by Woock and Joe Sipher, both veterans of Handspring (which was eventually sold to Palm) and then Virgin Electronics. They incubated in 2005 with venture capital firm Kleiner Perkins and got funding initially for a service that treated a voice message like a text message--letting you send voice messages across any network. People liked the service, but there was never a good revenue path, they said.

With the advent of the iPhone and its App Store, the duo changed their direction. In 2008, they launched an app called Pinger Phone that helped integrate different types of communications methodologies for contacts (social-network usernames, IM handles, phone numbers, e-mail addresses, etc.) But it also let you text for free, which is really why people were downloading it in big numbers, Woock and Sipher said.

That led Pinger to develop a dedicated ad-supported texting app, and the result was Textfree, which hit the App Store in February 2009. "It went crazy and continued to go crazy," Sipher said.

Initially, users could text up to 15 messages a day for free, or pay $6 a year for unlimited texting. In May 2010, however, Pinger made the app free for an unlimited amount of texting. That's also when it started handing out phone numbers.

"What that phone number does is, it creates a proxy social network. It's your ID to all your friends," Woock said. "Once you give people that number, they're texting you...our retention is off the hook."

And while Pinger gets its phone numbers just like the carriers do, by buying them from a local exchange carrier, they've been able to get good pricing because of their already established text volume. "We have carrier-like volume so we can get carrier-like pricing," Sipher said.

Pinger, which offers other apps, such as i2i and Doodle Buddy, has been profitable since September 2009 and employs more than 20 people full-time. It generates about 1.2 billion ad impressions a month through a range of mobile-ad networks, though most are driven by Google's. Textfree, itself, counting all its iterations, has been downloaded more than 7 million times.

Although founded on the idea of carrier independence, Woock and Sipher admit that Pinger is very reliant on Apple right now. Still, all it needs is an open operating system (they plan to launch Textfree for Android by the end of the year) and a mobile device that can connect over data. "We are platform-agnostic," Woock said.

So in time, my daughter might have more kids her age with whom to to text. For now, however, I'm enjoying being in-the-know about the daily goings-on in her life. Kids are much more open via text, I've learned. The New York Times' David Pogue came to a similar realization, after his 11-year-old daughter downloaded Textfree. "I've never felt so in touch with my own daughter," he wrote.

I wonder if Pogue's daughter has her ears pierced.