Smartphone Startups Handle Calls With Wi-Fi to Push Service Pricing to $5 per Month

As reported by Slashdot: two companies, Republic Wireless and FreedomPop, that reduce cellphone costs by relying on strategically placed Wi-Fi routers are at the forefront of a tantalizing communications concept that has proved hard to produce on a big scale. 

The concept championed by the two little companies in their nationwide services is surprisingly simple. They offer services that rely primarily on Wi-Fi networks, and in areas without Wi-Fi, customers can pull a signal from regular cell towers. 

"Wi-Fi first is a massive disrupter to the current cost structure of the industry," says Stephen Stokols. "That's going to be a big shock to the carriers." For $5 a month, customers of Republic Wireless can make calls or connect to the Internet solely over Wi-Fi. 

For $10 a month, they can use both Wi-Fi and a cellular connection from Sprint in Republic's most popular option. Republic Wireless's parent company, Bandwidth.com, a telecommunications provider with about 400 employees, developed a technique to move calls seamlessly between different Wi-Fi networks and cell towers. 

"You can't pretend these companies are major players by any stretch. But I think their real importance is proof of concept," says Craig Moffett. "They demonstrate just how disruptive a Wi-Fi-first operator can be, and just how much cost they can take out."

In major cities, the Wi-Fi-first network makes sense. People use smartphones frequently while sitting around their offices and apartments, and Wi-Fi can handle the job just fine. But once people start moving around, it is not so simple. 

The benefit of a cell service is that your phone can switch among multiple towers while you are on the go which wi-fi is not designed to handle. Google may be experimenting with a hybrid approach similar to the small companies'. 

A person briefed on Google's plans, who spoke on the condition of anonymity because the conversations were private, says the company wants to make use of the fiber network it has installed in various cities to create an enormous network of Wi-Fi connections that phones could use to place calls and use apps over the Internet. 

In areas out of reach, Google's network would switch over to cell towers leased by T-Mobile USA and Sprint. Still many wonder if even the biggest companies could make a Wi-Fi-based phone network work. "There are just so many places where Wi-Fi doesn't reach," says Jan Dawson "and the quality of Wi-Fi that you can find is often subpar."