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Summary:

Scratch Wireless is a new MVNO with a new business model. Instead of charging you subscription fees to access the cellular network it gives you voice and SMS over Wi-Fi for free.

Wi-Fi logo

There’s no shortage of new virtual operators emerging onto the U.S. mobile scene, but there are very few that are giving voice and SMS services away for free. Scratch Wireless is positioning itself as mobile carrier that only sells cellular connectivity as a last resort. Instead it’s building its core communications services on the back of Wi-Fi, and it’s charging nothing for that service beyond the $269 up front cost for its initial phone, the Motorola Photon Q.

Scratch Wireless believes that the prevalence of Wi-Fi networks has reached a point where consumers can use the technology as their sole means of wireless connectivity, CEO and founder Alan Berrey said in recent interview. Consequently, it’s designed its service to use Wi-Fi as the primary access technology and the cellular network as a backup.

Customers can call or text for free over Wi-Fi networks, and if they choose, they can buy cellular minute and data passes that allow them to connect to Sprint’s network. A one-day 30-minute voice pass cost $2, as does a 25 MB one-day data plan. Customers can buy 200 MB or 250 minute monthly passes for $15. Meanwhile, texting on both the cellular and Wi-Fi networks is always free.

Scratch Wireless Wi-Fi graphic

But if customers stick solely to the Wi-Fi network for voice and data, then they’ll never pay a dime, Berrey said. Scratch uses both VoIP and IP SMS for its services, which helps it save costs, but it still provides a phone number to each subscriber that can be dialed or messaged like any other number.

Mobile virtual network operator (MVNO) Republic Wireless has also been experimenting with this kind of Wi-Fi-first model, but instead of discriminating between cellular and Wi-Fi uses, it bundles both access technologies into its service, charging a cheap rate of $19 a month for unlimited service. Berrey, however, believes that many consumers, particularly younger ones, are network-aware enough to limit their use to Wi-Fi. While many customers will buy occasional cellular passes, Berrey expects a large segment of them will never use its paid services.

How will it make money off those customers? While Scratch said it wouldn’t push advertising on its phones, it can share revenue from media and app store partners. There are definitely ways of monetizing mobile beyond subscription fees — other MVNOs like FreedomPop are exploring similar models — though Scratch executives were still a bit vague about the specifics.

Scratch is going after a young demographic accustomed to rationing their mobile use. Whether it can turn such a freemium model into a profitable business remains to be seen, but it’s interesting to see the experimentation going on the MVNO market. It’s also is tapping into a growing trend in mobility to emphasize Wi-Fi over cellular networking.

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  1. if these guys get into multi carrier dealers that usually carry MVNO product this could be a huge hit. one of the thing i have noticed is that companies like freedompop and republic wireless have so far been interested only in internet signups.

    the reality is the people most likely to go for these products likely do not use credit cards or buy online. if they do not want to work with dealers than they should at least get into walmart or walgreens next to the majicjacks and prepaid phones.

    1. reality is the people most likely to go for these products likely do not use credit cards or buy online.

      The reality is people most likely to use these products do buy online. Games, apps, online services. They do use something very similar to credit cards to make purchases, perhaps you’ve heard of prepaid debit cards and how their use has exploded over the last few years.

  2. instead of 30 days passes i wish they would just let you load a balance and than buy minutes/data pay-as-you-go

  3. My son tried to do a wi-fi only ipod phone experiment. It failed miserably. Cell is really the only reliable way to go. The best and fairest priced service I have found is Ting.

    They have a good selection of smartphones and you can potentially bring your own. I bought a Samsung Sprint S3 off Ebay and ported it to Ting with no issues. I’ve had Ting for 10 months now and am totally satisfied. I’ve gotten good coverage as Ting uses Sprint’s network. 100 minutes, 100 texts, 100 megs = $15. You can move up to the next “bucket of services” as needed and only pay for what you use. Customer service has been outstanding both online and voice. My wife had Virgin Mobile at one point, also on Sprint’s network. However, Ting seems to have better coverage and offers roaming. She also had AT&T Go Phone. Good luck figuring out ATT’s billing if you exceed your minute limit.
    With Ting you can also combine multiple devices – aka “family plan”. My average monthly bill for 2 phones with tax = $35.

    This link: https://zfh3ftteo1.ting.com/ will get you a $25 credit towards a phone or service. Full disclosure: I also get a $25 credit : )

    1. Ting is cheap, but certainly not the cheapest option. I use Airvoice, 250minutes (all text (google voice) and data are wifi), $10/mo. Use any unlocked GSM phone. There are cheaper options, but they have good customer service. Full disclosure: I get absolutely nothing telling you this.

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