Mixing, Matching and Charging Less for a Phone Plan

AN Android smartphone with unlimited calls, unlimited texting, unlimited data and no contract, all for $19 a month? Really?

When I first saw this offer fromRepublic Wireless, I rubbed my eyes and looked for an asterisk leading to fine print that detailed a huge catch. But Republic, a division of a telecom company called Bandwidth.com, delivers exactly what it advertises. It can do so because the handset technology is a curious hybrid: it uses Wi-Fi when the customer is in a Wi-Fi area and Sprint Nextel’s 3G network when it is not.

The concept brings together the best of two worlds: the low cost of voice calls carried over the Internet and the convenience of making calls to any phone number using a major carrier’s cellular network when Wi-Fi isn’t available.

In my own case, on a typical day, I use my mobile phone mostly when I’m not actually mobile: I’m either at home or at work, perfectly positioned to use Wi-Fi at both locations. And I don’t even use the phone as a phone all that much. I use it mainly for e-mail and texts, neither of which requires enough bandwidth to benefit from the power of the fastest data networks.

If you walk into a Verizon Wireless store and buy an iPhone 5, you’ll pay $60 or more a month for an unlimited talk and texting plan, depending on the data allocation for Internet use that you select to go with it. Some of that monthly charge goes toward repaying the carrier for the discounted price that makes a $649 iPhone seem as if it costs only $200. But most of the charge is for gaining access to the carrier’s wireless network.

“We were looking at a mobile industry that had begun to charge extraordinary amounts of money, and we saw an industry opportunity that everybody else was missing: Wi-Fi is the new mobile,” says David Morken, co-founder and chief executive of Bandwidth, based in Raleigh, N.C.

Smartphone apps that offer voice calls using data plans, not minutes allocated for calls, are plentiful. Just last month, Facebook quietly added an option that lets users of the iPhone version of Facebook Messenger place free voice calls to other Messenger users. But using those apps to make a call means the recipient has to run the same app, an irksome requirement that never comes up when using phones alone.

Republic buys access to Sprint’s network on a wholesale basis for calls made outside of Wi-Fi areas. Its business model assumes, however, that Wi-Fi carries the load a majority of the time its phones are used. The company says that its service, even at $19 a month, is a profitable operation on a per-customer basis.

“We don’t have to force people, or even ask people, how to behave,” Mr. Morken says. “Over 60 percent of the time that the phone is being used, on average, our users are using Wi-Fi and that number is only going up.”