A handful of small but growing US companies are trying their hand at big market disruption: Smartphone plans can be free or cost as little as a few dollars a month. The trick is to use Wi-Fi first and cellular as the backup. Will this force big carriers to rethink their cellular-only strategy?
Why use pricy cellular services when you can connect (a lot of the time for free) to millions of Wi-Fi hotspots out there? Lots of data indicates that smartphone users already prefer Wi-Fi to cellular by a vast margin. A handful of startups are jumping on this as their chance to disrupt. The recipe is simple. Give consumers more of what they want: Unlimited data plans & free Wi-Fi calling at rock bottom prices.
FreedomPop, Scratch Wireless, & Republic Wireless may still be small, but they’re growing fast. According to this NY Times report, Republic is growing its subscriber base by 13% every month, while FreedomPop is doubling its numbers every 4-6 months. Google is rumoured to be working on a similar ‘Wi-Fi first’ plan.
Cellular today is mostly a ‘zero-SIM’ game. Carriers need to support more and more traffic, and they only grow by poaching customers from each other. Compared to what the big US carriers are going through right now, Wi-Fi first providers are doing well by targeting thrifty consumers with a new value prop.
The timing for ‘Wi-Fi First’ disruption could be just about perfect: The technology to keep consumers ‘always on’ with Wi-Fi first and cellular second is here. Smartphones already prefer Wi-Fi to cellular but apps and embedded software can now check for Wi-Fi quality before connecting and fall back to cellular only when needed. More sophisticated methods even blend traffic streams from Wi-Fi and cellular based on cost & availability. Add to that big momentum for Wi-Fi calling following Apple’s announcements in September.
So what will be the market impact? For starters, carriers in the US and elsewhere may soon be forced to rethink how they spend money on networks. Investing close to nothing on the Wi-Fi that’s already out there would be a radical departure from sinking 45 billion dollars into new cellular frequencies, which – by the way – just happened in the recent US AWS-3 auction.
For more on this and all the other great innovation in Wi-Fi technology & business models join us at the Wi-Fi Innovation Summit coming up in San Francisco on April 21-22. Go to this link to check out our full program.