Republic Wireless, a Wi-Fi first carrier that jumps onto Sprint's (NYSE: S) cellular network when Wi-Fi coverage isn't available, made good on its promise to launch new rate plans that refund customers for unused cellular data.
Under the new offer, customers will get a bill credit for their unused data on their next month's bill. Republic launched a trial this spring that recently concluded and included more than 2,000 customers to test the service. In an interview with FierceWireless, Jon Schniepp, Republic's senior vice president of product management, said the company wanted to test whether the plans would save customers money and if it would be easy to implement.
"The feedback has been really positive," he said, which "accelerated the timeframe for bringing this to market."
Republic estimates that if its customers make no changes to how they use the company's service, 78 percent of its current subscribers will pay the same or less with the new offering. In the trial with the new plans, customers had average monthly bills of $14.88, which represented a 31 percent savings compared to what the same customers were paying before.
The company's new "Republic Refund" plans are available for new and existing customers, though existing subscribers can stay with their current plan as well. They are:
- $5 per month for unlimited Wi-Fi voice, texting and data.
- $10 for the "Base Plan" for unlimited Wi-Fi voice, texting and data, plus unlimited cellular voice and texting.
- $17.50 for unlimited Wi-Fi voice, texting and data, plus unlimited cellular voice and texting and 0.5 GB of cellular data.
- $25 for unlimited Wi-Fi voice, texting and data, plus unlimited cellular voice and texting and 1 GB of cellular data.
- $40 for unlimited Wi-Fi voice, texting and data, plus unlimited cellular voice and texting and 2 GB of cellular data.
- Additional cellular data costs $15/GB.
The majority of Republic customers use much less than 1 GB of cellular data per month; Schniepp said on average it was around 700 MB. Under the new plans, that dropped to 400 MB, since customers were incentivized to use less cellular data to get a larger refund. In any event, he said that around 93 percent of Republic customers' data usage is over Wi-Fi. "Our customers are not data misers," he said. They use just as much as customers on other carriers, just over Wi-Fi, he said.
Google's (NASDAQ: GOOG) "Project Fi" MVNO, which uses Wi-Fi hotspots for calling and data in addition to cellular connections from Sprint and T-Mobile US (NYSE:TMUS), also gives customers credits for their unused mobile data. For $20 per month plus taxes and fees, the service offers access to around 1 million U.S. Wi-Fi hotspots and unlimited domestic voice and texting, as well as unlimited international texting and low-cost international calling in more than 120 countries. Then, customers pay $10 per GB of data on top of that. Importantly, at the end of the month, Google will credit users for their unused data, so that users only pay for what they use.
Schniepp said Republic is "not seeing a big impact on our business thus far" from Project Fi. "Fundamentally, I think it's great for consumers that there are challengers attempting to set the industry on a new path," he said, adding that it remains to be seen how committed Google will be to Project Fi in the long run.
Will other carriers adopt the policy of refunding customers for unused mobile data? Schneipp said he would like for that to happen but also said it is unlikely because of the "considerable disruption of profit" that would happen if Tier 1 carriers adopted such an approach.
"For the big guys who have a lot to lose, there's significant barriers to this," he said. Republic can refund unused data in a "sustainable" way because of its cost structure, the fact that so much of its customers' data usage is on Wi-Fi and because it only supports two cell phones for this service (the first-generation Motorola Moto G and second-generation Moto X).
Strategy Analytics analyst Susan Welsh de Grimaldo said she "wouldn't discount" the possibility that a Tier 1 carrier could introduce refunds for unused data, noting that more carriers have adopted rollover data recently. However, she said it would likely be a move smaller players and MVNOs would make to stand out. "They all do need something to get more attention," she said.
Current Analysis analyst Lynnette Luna agreed and said Republic's offering "will help raise awareness around how much data consumers pay for but don't use." She said it will likely affect prepaid carriers more than any others.
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