Customers looking to for “cheap” wireless services have a growing list of options, though they may need to makes sure to check the fine print before making that final selection.
The latest entrant looking to undercut pricing standards set by established wireless carriers is Scratch Wireless, which launched today thanks to $5 million in funding and plans to launch its unique wireless offering during the fourth quarter. The offering will rely heavily on Wi-Fi services to offer customers “free” wireless services as well as the option to pay for cellular connectivity for voice and data.
The free component includes all voice, messaging and data connectivity over a Wi-Fi connection, with the catch that the Wi-Fi connection itself is free. For those looking to roam beyond a Wi-Fi signal, Scratch has partnered with Sprint to offer day and monthly passes for voice and data services, though messaging is offered gratis regardless of connectivity. Cellular voice packages include 30 minutes of calling per day for $2, or 250 minutes over 30 days for $15. Data packages, which include access to Sprint’s CDMA-based 3G or LTE network, cost $2 per day for 25 megabytes of data or $15 for 30 days for 200 MBs.
To access these services, customers will be limited initially to a single smartphone provided by Scratch in the form of the Motorola Photon Q. That device is available at an un-subsidized price of $269. Scratch Co-Founder and CEO Alan Berrey explained that the integration necessary into the Android operating system has so far limited device availability to just the single device.
Voice calls over a Wi-Fi connection will be handled by a voice over Internet Protocol connection. Scratch confronts the notion of customers not having continuous connectivity for free by citing a 2012 Cisco report that claims “80% of the time, people connect to the mobile Internet from their home, office, or other indoor location – all areas that are addressable by Wi-Fi.”
Scratch Wireless Co-Founder and CEO Alan Berrey explained the company’s service offering, business model and expectations to RCR Wireless News.
Scratch’s funding was led by CommonAngels.
The Scratch offering is somewhat similar in operation to that of Republic Wireless, which launched services in 2012 around a mobile hotspot device and more recently added a smartphone to the mix. Republic’s smartphone service relies mainly on Wi-Fi connectivity, with cellular backup provided by Sprint. The service is currently limited to the Motorola Defy XT smartphone that is priced at $99, though the company has plans to add Motorola’s latest Moto X device.
Republic’s pricing is somewhat different in that it offers unlimited voice, messaging and data services across either a Wi-Fi or cellular connection for $19 per month.
More recently, FreedomPop announced plans to enter the smartphone space with its own “free” wireless offering that provides customers with a limited bucket of voice, messaging and data services for free, or the ability to upgrade to unlimited voice and messaging with a bucket of data for $11 per month.
The smartphone offer will provide customers with 500 MBs of data, 500 text messages and 200 anytime calling minutes for free; 500 voice minutes, unlimited text messages and the same 500 MBs of data for $8 per month; or customers can upgrade the voice calling and text messaging for the $11 per month. FreedomPop does not charge for data overage, with additional data priced at 2.5 cents per megabyte. Customers are also being offered 1 gigabyte of data free for one month, which is then charged at an additional $10 per month going forward.
As for device selection, FreedomPop is starting with the HTC Evo Design that will sell for $99 without a contract through an initial launch promotion. FreedomPop expects to add more Android-powered devices going forward. One limitation of the current offering is that it’s not compatible with Sprint’s LTE network, so works only across CDMA-based 3G and WiMAX-based “4G.”
FreedomPop CEO and co-founder Stephen Stokols demonstrated the company’s wares at this year’s Consumer Electronics Show in Las Vegas.
Whether these off-brand services are able to garner interest from customers looking to spend less per month than what is offered by more established players remains to be seen. However, that uncertainty does not seem to be stopping new entrants from joining the space.
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