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Summary:

Startup TextNow has pulled off a feat no other mobile company has accomplished: a mobile service built entirely around IP communications. It’s selling voice and data plans on a pair of Samsungs for $19 a month.

TextNow Galaxy Nexus

Don’t let the name fool you. TextNow aims to be a lot more than just another over-the-top texting app, and on Tuesday its demonstrated its true ambitions by becoming the first in the U.S. to offer an IP-only voice service over a smartphone, beating its virtual operator rival FreedomPop to market.

TextNow began selling refurbished versions of the Samsung Galaxy S II ($120) and Nexus S ($90), both with their standard phone features disabled. In their place is TextNow’s voice and text app, which lets you make VoIP-based calls and send IP SMS just as you would on a normal mobile phone. TextNow is a mobile virtual network operator (MVNO) on Sprint, but instead of buying bulk minutes and messages from its carrier partner, it’s sending all traffic over Sprint’s 3G data network.

TextNow Galaxy S IIThe advantage to this approach is much lower costs. For its baseline service TextNow is charging $19 a month, which includes 500 MB, unlimited texting, unlimited inbound calls and 750 minutes of outbound calls. TextNow assigns you a standard telephone number, making the service look like any ordinary phone to outsiders – think Vonage on a smartphone – but sticking to its OTT roots, all calls to other TextNow users are free.

In truth, the service is TextNow’s standard OTT app featured front and center on a dedicated smartphone with an access plan included. When Derek Ting, co-founder and CEO of TextNow’s parent company Enflick, gave GigaOM a preview of the smartphone strategy in June, he explained that TextNow has always targeted younger consumers who couldn’t afford — or simply didn’t want — to pay for a monthly mobile service plan. Consequently the typical TextNow customer uses its app to connect devices like the iPod Touch or tablets with no mobile connection.

Derek Ting - HeadshotTextNow felt that those customers didn’t just need an app they could use on Wi-Fi but a full-bore mobile service that took advantage of IP communications to offer cheap voice plans. It started out selling a 3G Wi-Fi hotspot that could connect customers to the wider mobile network, but its ultimate goal was to offer phones following that same principle. That’s why TextNow is targeting older Android smartphones and refurbished handsets, Ting said: Not only can it offer a cheap service, but cheap devices as well.

Ting sent me one of its Galaxy S II’s so I could test the service out for myself, and I have to say it worked it lot better than I thought it would. I live in Chicago where I was able to access Sprint’s WiMAX network (both phones support it), and found the voice quality to be just as good as a regular mobile call. SMS went through without a hitch and there was no delay receiving messages. Even when I found myself in 3G coverage, I had no trouble making or receiving calls, though I did find that the setup time for connecting calls increased substantially.

TextNow isn’t the only company with an all-IP mobile strategy. Mobile broadband MVNO FreedomPop has promised to deliver its own VoIP service this summer using Android phones and its unique freemium business model. MetroPCS has been supporting VoIP on its LTE systems since August, augmenting its traditional 2G network (though that service will quickly disappear as customers migrate over to T-Mobile’s GSM network), and the all of the major carriers plan to offer voice-over-LTE (VoLTE) in the next few years.

The difference is that the major carriers aren’t necessarily using VoIP to make their services cheaper. They’re tapping VoIP to make more efficient use of their networks and build new IP communications features around their core voice services.

  1. Are they using wideband codecs?

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    1. Kevin Fitchard Tuesday, August 6, 2013

      Hi Rick,

      I don’t know the details on the exact codecs TextNow is using, but I suspect there is no wideband support. Ting told me Enflick tried to develop very efficient codecs so CDMA EV-DO networks could handle voice calling with little trouble. I suspect that means they’re narrowband.

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  2. what happens when the 500MB is used up?

    that’s data quota is the big problem with this plan. i have a prepaid multi-carrier store that services lower income and price conscious customers. voice minutes have become a total non-issue. the important thing is un-throttled data cap size. a service like this needs a multi-gig cap.

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    1. Kevin Fitchard Tuesday, August 6, 2013

      Hey Tom, I can see how this wouldn’t appeal to a hard-core data user, and I don’t think TextNow is going after them. Though there are plenty of other data-focused cheap MVNOs. You might look into Ting or Republic Wireless, or if you can live with 2 gigs, one of the SIM card MVNOs on T-Mo or AT&T’s network.

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      1. Yes, Ting is a very good option to consider, and they have EXCELLENT customer service.

        Republic Wireless…I would avoid this company. I have their service and it is problematic – and I’m being kind in saying it that way – not to mention that their customer service is dismal. They refuse to speak to customers live, one-on-one, but force you to post service requests to a public forum, where they *may* get back to you if they feel like it.

        There are tons of MNVO’s pushing the business envelope on deeply discounted rates. Solavei, AirVoice, Page Plus, StraightTalk, Platinumtel and many more I read about at the Howard Forums.

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        1. Ive had no problem with republic wireless, and I thought customer service was great, the got back to me in 5 minutes!

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  3. Can it be used on iphone 4G?

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    1. Kevin Fitchard Tuesday, August 6, 2013

      You can use TextNow’s app, which provide’s the same features, but you have to connect the phone through another carrier. TextNow doesn’t offer an iPhone.

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  4. Actually, this is brilliant. I have been waiting for this for some time to come. I am involved in a highly regarded mVoIP , sms app in Canada and US, and the data ONLY is the key. It may take some time to evolve, but this is the first over the fence. Mobile minutes from ILEC and CLEC are all going to be converted to data, wifi, mifi…and we are off to the races.
    I am not that tech on the back end, but I know this will change much.
    Three biggest issues to convert flip phone users is as follows: the real marketplace right now
    Cost of entry to smartphones/low cost smartphones
    Cost of plan/data…this will greatly help
    Smartphone knowledge and education…with low cost entry, flipper will now take the chance more readily.

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  5. How is this different than talkatone and google voice?

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  6. Kevin Fitchard Tuesday, August 6, 2013

    Hi bhanuk,

    The technology isn’t different. TextNow is just providing a full-fledged mobile service (connectivity as well as services), while Google gives you an app your run over someone else’s network connection.

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  7. I have a few questions..

    1) Once data has ran out does you phone stop working (ie no calls, texts)

    2) Does text’s and calls eat away at your 500mb allowance

    3) Does incoming call count toward your 750 minutes?

    4) Once you’ve used all your minutes you can still receive calls with unlimited minutes??

    thanks

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    1. once data runs out you still have unlimited texts and whatever minutes are left on the plan you chose

      but you can upgrade to a more expensive plan to get more data if you are on the low (tall) and medium (grande) plan.

      incoming calls don’t count against your bucket of minutes

      if you use up your minutes but still have data left you could use a google voice number with grooveip to receive calls (calls to the gv number, not the textnow number)

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  8. Jeremy Stevens Wednesday, August 7, 2013

    Here’s my question: how are they dealing with the problem *all* VoIP phones have that the service over the cell towers is terrible?

    When driving around or moving, every VoIP service I’ve used just drops all the time or sounds underwater/bad/stuttery. I thought that was a limit of the cell tech.

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    1. Kevin Fitchard Wednesday, August 7, 2013

      Hi Jeremy,

      I’m sure TextNow will have many of those same problems, especially when you consider it’s working primarily over a 3G network (it;s working with Sprint to get LTE phones tho). Though I didn’t point it out in the post, the service does tap into Wi-Fi which produces a lot better call quality. And while I didn’t have many issues in my admitted small number of tests, I wasn’t driving either, just walking around my neighborhood.

      I think TextNow isn’t trying to convince high end users to switch to its service. Rather it’s trying to attract people looking for really cheap service yet still want to data and smartphone services.

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  9. So if the texting and calling uses 3g, does that mean when your not within WIfi, calling/texting consumes data as well?

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  10. This is not the first VoIP, what about republic wireless???

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