Republic Wireless is dropping the “so-called” from its so-called unlimited data plan, revealing in its company blog it has removed all restrictions on Internet use for its Android smartphone customers. While Republic’s customers are sure to be happy with the change, let’s see how long this experiment lasts. Unlimited is a hard business model to make work, especially if you’re a mobile virtual network operator (MVNO) like Republic.
Republic, the cellular arm of Bandwidth.com, launched last month with a bang, marketing $19-a-month unlimited voice, text and bandwidth plan. That sounds nuts but Republic had a unique strategy. It planned to make extensive use of public and private Wi-Fi to offload not only its data traffic, but calls and SMS as well. The details, however, were in the fine print.
Since Republic is a mobile operator it needed a cellular network to connect customers when out of range of Wi-Fi, so it contracted with Sprint to buy voice and data capacity on its CDMA network. Those wholesale minutes and bytes cost Republic money, and the more of them a customer uses the more likely Republic’s $19-a-month bargain turns into a loss-making machine. So it instituted something called a cellular usage index (CUI), which used an ever-evolving set of byzantine rules to determine what combination of voice minutes, text messages and megabytes warranted Republic booting customers off its network.
As you might expect this led to a lot of confusion and anger among Republic’s customers (or members as it calls them), so on Thursday Republic posted a refreshingly honest blog entry acknowledging that the usage index wasn’t working and announcing its plans to go truly unlimited. Republic general manager Brian Dally wrote:
This is what being in beta is really all about. We’re here to learn and innovate or fail trying. And as we’ve said before, we’re not here to sell you but to build a new wireless business together with you. You helped us realize that we didn’t get this right on our first try with the CUI, that we can and should do better.
…Rather than revising our fair use policy, we’ve decided not to have one at all. There will simply be no thresholds, and no risk of losing service. We’re doing away with all of that to keep all of the focus instead on where it really belongs: Creating a new wireless future together. A future that is simple to understand, unfettered to use, and an amazing value for all. That’s what we started down this path to do. That’s where the power of this vibrant community, dynamic Wi-Fi ecosystem and revolutionary technology should be invested. We’re all-in.
There is a catch, but a perfectly reasonable one. Republic said that the unlimited plan is technically in the beta stage, meaning it’s still determining if the concept is economically viable. “We won’t end beta until we either achieve economic sustainability or become convinced that doing so is impossible,” the Dally said.
I wish Dally and Republic the best of luck, and laud them for their willingness to test the boundaries of unlimited in a very public experiment. But I’m not very confident they can pull it off. Other MVNOs have tried and failed. H2O Wireless was forced to cap off its unlimited data plan within a few months of launching it. Sprint is the only major operator with an unlimited service, and it charges a lot more than $19 a month for it.