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Summary:

Mobile broadband MVNO Karma has been running its social bandwidth experiment for six months, allowing anyone to connect to any of its customers’ WiMAX hotspots for free. So far it’s had a lot of takers.

Robert Gaal, Karma CEO
photo: Karma

Karma launched its social broadband experiment right before Christmas last year, and in that time its customers — like bandwidth Santa Clauses — have distributed a total 1,000 GBs of free mobile data to anyone who has asked for it.

Amsterdam transplant and NYC TechStars graduate Karma is trying to pioneer a new kind of mobile broadband business model, in which customers don’t have to own a device to connect to its 4G network. Any customer can buy one of its $79 WiMAX hotspots, but it’s not that customer’s device alone. Anyone can connect to it through Wi-Fi, sharing the connection with the hotspot’s owner.

Karma MVNO hotspot 4G

A Karma WiMAX hotspot

That might seem like a odd concept – why would you want to share your connection with strangers? But Karma provides plenty of incentive. Every time you share your connection you get 100 MB of free data. Your bandwidth beneficiary also gets 100 MB to play with so no data is subtracted from your plan.

According to Karma co-founder and CEO Robert Gaal, it hasn’t been difficult convincing people to enter into these “social bandwidth” arrangements. Today about 5,000 people each month are connecting to the Karma network without owning a hotspot. They’ve consumed about 1,000 GBs of WiMAX data over six months, while hotspot owners typically share their connections five times a month, earning 500 MB of data. In total, Karma users have earned about 3,000 GBs of free data. (As a mobile virtual network operator Karma buys capacity from Clearwire)

Of course, these numbers aren’t exactly huge in the grand scheme of mobile broadband. Verizon and AT&T are delivering multiple petabytes of data over their 3G and 4G networks every months – not terabytes. But Draper Fisher Jurvetson-backed Karma is still a tiny operation that just launched six months ago. Gaal said Karma now has tens of thousands of paying customers, though he wouldn’t reveal an exact number. It’s going to take a while for it to persuade consumers regarding the merits of its social bandwidth model.

Karma staff MVNOBut Karma has plenty of help making the case for shared connectivity. Startup Open Garden is trying to accomplish the same thing as Karma through software, crowdsourcing vast ad hoc mesh networks between devices. Spain’s Fon pioneered this model for Wi-Fi, creating a network community that shares their home broadband connections. The Open Technology Institute is creating an open-source networking standard called Commotion.

At GigaOM’s Mobilize conference in October, we’re going to thoroughly explore these kind of ad hoc networking models. Both Open Garden CEO Micha Benoliel and Karma Chief Product Officer Steven van Wel will be speaking on the topic.

But it’s not just a bunch of feisty startups pushing this social contract. France’s Free Mobile has taken the community Wi-Fi model to 4 million residential broadband gateways, creating a hotspot network for its mobile users. Today Free extended that community model to femtocells. Even an entrenched company like Comcast sees the merits of shared connectivity. Last week the cable operator launched a program that will open up millions of residential Wi-Fi connections to other Comcast customers.

Karma is hoping network effect will allow it to grow. The more people buy its hotspots, the more Karma ambassadors there will be in the wild offering up free connections to strangers. Some of those customers may opt to buy a Karma hotspot of their own and the cycle will continue. Karma is even seeding cities with bandwidth, placing hotspots in strategic places such as New York City food trucks.

If it’s successful, Karma could reach the necessary density of users that would allow it to divorce its mobile broadband service entirely from the mobile device. A gigabyte of data on Karma only costs $14, and it never expires. You just buy another gigabyte when you run out or earn more by sharing bandwidth. With that kind of model, Karma could easily sell bandwidth without a dedicated connection. Users would just venture out into the city and connect to whatever random Karma hotspot was nearby.

  1. David Hoffman Saturday, June 22, 2013

    I do not see a viable long term business plan. At some point somebody has to pay for all this mobile cellular bandwidth use. Giving away free stuff with borrowed venture capital money only goes so far. There is a huge difference between sharing a consistently reliable wired internet connection by utilizing a guest access system on a highly capable WiFi router and sharing mobile cellular broadband. Those wired internet access companies, with a mobile telephone business division, that are promoting WiFi sharing, are much more willing to absorb the absorb the entire cost of the guest access bandwidth usage over the long term. It benefits them in terms of mobile cellular customer retention. Since some of these guest WiFi deployments will be less costly than building new cellular towers, it is a good investment for them. The cable companies are utilizing whatever cable internet access installations they have and adding WiFi routers and access points with guest access protocols. It does not cost them much, generates lots of good publicity, and aids in customer retention.

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    1. Kevin Fitchard Sunday, June 23, 2013

      Hi David,

      All good points. I definitely agree with you about the power of Wi-Fi and residential broadband sharing, and the business case there is much more obvious. Plus, with companies like Comcast getting into the act this is no longer just a crazy startup idea. It’s moving mainstream.

      As for Karma, I agree the business model is more fuzzy. I didn’t go into all of the details in this post (I did in a few of the others I linked to), but I few more points might clear some things up. You can’t consistently log into random Karma hotspots and get free access. Karma authenticates you against your Facebook credentials so once you’ve used up your 100 MB you have to buy access. So for now the free access component is more a viral marketing tool. But if Karma gets more density of users — and starts supporting a largely variety of devices — a deviceless plan might make more sense. Not as your primary broadband access. But given the structure of the its pricing (data never expires) it could be an interesting backup.

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