Republic Wireless defends $19 'unlimited' service following scathing analyst report

Republic Wireless, which launched a $19 per month hybrid VoIP/cellular service on Nov. 8 that provides unlimited calling, texting and data for customers with specialized Android hardware, is defending itself from criticisms about the plan's purported deficiencies.

In a mostly negative report on the service, Current Analysis analyst Avi Greengart wrote that while the plan has "an extraordinary value proposition" there are several major issues with the service, including a lack of a handoff when users switch between Wi-Fi networks and cellular service provided by Sprint Nextel (NYSE:S). Current Analysis also said that Republic's fair-use guidelines for how many voice minutes, texts and megabytes of data users can use on cellular service is too restrictive for most users.

However, Greengart did sound a hopeful note and does state that the no-contract service is in a "beta" testing phase and comes with a 30-day money-back guarantee. "The problems we identified (such as dismal voice quality, lack of Wi-Fi-to-cellular handoff, unclear usage guidelines and lack of service usage meters) are either software issues or procedural ones that can be fixed or improved over time," the report said.

In an interview with FierceWireless, Brian Dally, general manager of Republic, did not disclose how many users have signed up for the beta version of the service, but said more than 1,000 phones have been delivered to beta users and that the response so far has been "overwhelmingly positive." Republic, a division Cary, N.C.-based VoIP and bandwidth service provider Bandwidth.com, prioritizes Wi-Fi over cellular connections but does fall back to cellular when users are not in range of a Wi-Fi network.

"We're already into pretty large numbers for a beta program and that's because we're pretty confident about the technology in its early iterations right now and over the long term as we continue to improve it," Dally said.

Currently, customers pay $199 up front for their first month of service and for the specialized phone that comes with the service. The handset is an LG Optimus smartphone running version 2.3, or Gingerbread, of Google's (NASDAQ:GOOG) Android platform (Dally said more phone options will be coming, but declined to say what those might be or when they will be available). If customers want to continue with the no-contract service, they can pay $19 a month plus taxes after that, but can cancel the service at any time without an early termination fee.

Dally did not give a specific timeframe for when the service will exit the beta testing phase, but said it will probably be early next year, and it all depends upon what Republic learns via the beta.

Greengart said that "voice quality on Sprint's cellular network is good, but voice quality over Wi-Fi is terrible, even in locations with excellent Wi-Fi."

"There is no provision for call handoff between Wi-Fi and cellular networks," the report states. "If a call originates at home and the user heads outside into their car, the call simply drops. It's one thing to ask consumers to use Wi-Fi whenever possible. It's another thing entirely to chain them to a hotspot."

Dally acknowledged that currently the handoff between Wi-Fi and cellular networks is rough, but said it will improve. Republic on its website promises an update scheduled for Dec. 17 that will provide "improved call quality, enhanced Wi-Fi setup features and some audio improvements."

"We will not launch a commercially available product that does that," Dally said, of having a call drop in a cellular-Wi-Fi handoff. "That is not our intent and we are actively developing handoff capabilities." Currently, when a Wi-Fi connection is lost for a call, Republic is dialing the call again and there is a brief pause.

"For someone to highlight that as a shortcoming of the service, kind of misses what the point of the beta is," Dally said. "We don't let the perfect be the enemy of the good."

The Current Analysis report also took issue with Republic's fair-use policy. "Consumers hate uncertainty, and while Republic Wireless offers 'unlimited' use, its definition of unlimited is not at all clear," the report said. "It will not charge overages, but if a user's 'Cellular Usage Index' (which it declines to specify) is too high, it will contact the user and kick them off the network entirely. What happens if a 'good' CUI user goes on vacation/gets stranded/has a family emergency and uses tons of minutes one month?"

Dally said this criticism also misses the point. Currently, the CUI threshold is 600 for a month--which is a combination of voice minutes, texts and data used over cellular, each of which is weighted differently based on the cost of delivery. Dally said users' CUI will be available online starting Monday, though it is not yet available on the phone. He said each user's CUI is based on how much they use of each component as well as how much is offloaded to Wi-Fi, and that the CUI threshold will change over time as more users sign up for the service.

For most users who prefer Wi-Fi and are using Wi-Fi offloading, Dally said the threshold will never be an issue. When users exceed the threshold, they will be notified and told how much they are using cellular service relative to other users and what steps they can take to increase their Wi-Fi use. If users are abusing the cellular usage, Dally said Republic will take steps to protect the community of users that primarily will use Wi-Fi. "We want to keep people on the service," he said. "We believe that for the vast majority of people this will not be an issue."

For more:
- see this Republic site
- see this Republic blog 

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