Raleigh-based Republic Wireless tries new plan where customers only pay for data used

Republic Wireless is relying on thousands of customers to help shape its innovative new pricing plan – and the customer experience that goes along with it.

Last week the Raleigh-based provider of low-cost mobile phone service began a beta test with about 5,000 customers who volunteered to try the new plan, which charges customers only for the cellular data they actually use. The volunteers will provide regular feedback during the course of what is expected to be a six-week test run.

“We’re on the bleeding edge, trying to invent new things,” Jon Schniepp, senior vice president of product management, said in an interview at the company’s Centennial Campus headquarters. “We’re not arrogant enough to think all the answers are inside this building.”

Corey Krone, 35, a Republic customer who lives in a small town west of St. Louis, is among the beta volunteers.

“I like the fact that Republic gives its customers an opportunity to be part of the testing,” said Krone. He anticipates the pricing plan being tested will reduce his monthly phone bill by about $15 month.

Getting things right has never been more important for Republic because its competition in the low-cost wireless market is about to intensify.

Last month, technology giant Google announced it was testing a hybrid service, called Project Fi, that uses Wi-Fi and cellular networks – which is what Republic offers. Google also said Project Fi customers would receive a refund each month for cellular data that they paid for but didn’t use, which is identical to the pricing plan Republic is testing. Republic unveiled its plan two days before Google went public with Project Fi.

Beta testing is in Republic’s DNA. The company first stuck its toe into the wireless market in 2012 with a beta test of its hybrid service, which was unique at the time.

Republic, which says it has a few hundred thousand subscribers and is rapidly adding more, is a division of Bandwidth, a privately held company headquartered in Raleigh. Bandwidth reports it generated more than $200 million in revenue last year and is approaching 500 employees.

Forging a good relationship with customers is especially crucial for Republic because it relies primarily on word of mouth and media coverage to attract customers.

“We don’t do paid advertising,” said spokeswoman Cherie Gary. “What we have spent cumulatively on marketing expenses since the company started is probably what Verizon and AT&T spend in a day.”

Feedback from Republic’s inaugural beta test, which lasted about a year, led to changes that were introduced when the service officially launched in 2013. Among them were the ability to deliver software fixes and upgrades to customer’s phones as needed.

“When we came out of the beta, the features that we focused on (developing moving forward) were the features that our customers said were most important during the beta phase,” Schniepp said.

In conjunction with that initial beta test the company launched the Community, an online forum where customers can converse with each other and with Republic staff. Next came Think Tank, which functions like an online suggestion box with an added wrinkle – customers can vote thumbs-up or thumbs-down on the suggestions.

“Its very easy for us to see what are the most popular ideas,” Schniepp said.

Republic formalized its beta process under the Republic Labs banner – featured on the company’s website – and is planning a wave of new beta tests over the next eight months. They include testing a new mobile phone compatible with Republic’s service and the ability to access calls and messages on tablets, laptops and desktops as well as phones.

Project Maestro

The beta test of the new pricing plan has been dubbed Project Maestro. Upcoming betas have been labeled Tempo, Bridge and High Hat, among others.

“They’re all music references,” Schniepp said. “What we said internally is, ‘great music is made with an ensemble.’ That’s how we think about products.”

Today Republic has two plans that offer cellular data: $25 per month for unlimited data on a 3G cellular network or $40 a month for unlimited data on a 4G network. Both plans include unlimited talk and text; Motorola phones compatible with the company’s hybrid service range from $99 to $399.

Under the Maestro beta plan, however, customers pay $10 for unlimited talk, text and data over WiFi, plus an additional $15 for each gigabyte of cellular data. But, in the end, customers pay only for the data they use.

“We’ll credit (customers) penny for penny on your next month’s bill for what they don’t use,” Republic CEO David Morken said when Maestro was announced last month.

Republic calculates most of its customers would save money under the Maestro plan and is hoping that the beta test will bear that out. Officials sent emails to all of its customers asking if they wanted to participate in Maestro; nearly 10,000 said yes, but the company limited the beta to about 5,000.

Republic customer Michael Schmerling, 42, an attorney who lives in Scottsdale, Ariz., said volunteering for Maestro was “a no-brainer” because he expects the new pricing plan will cost him much less than the $40 a month he currently pays.

“On average, I use 0.7 gigabytes of (cellular) data a month,” he said. “So, under Maestro, rather than pay $40, my new plan will be roughly $20.”

Schmerling also appreciates the “fairness” of paying only for the data he consumes.

“The way I look at it,” he said, “when I go to the gas station, I fill the tank with the exact amount of gas I need.”

‘Gas gauge’

Republic also wants to to use the beta test to find out how the price plan will affect the customer experience.

“Today’s plans are unlimited, which is really easy,” Schniepp said. “We want to create the same easy experience for these new plans. ... The customers don’t want to think about it too much. They don’t want to major in managing their cell data.”

In hopes of making the experience as hassle-free as possible, Republic has created an app that keeps a running tab on data usage – Schniepp describes it as a “gas gauge” for cellular data. The app also lets you see what applications are using the most cellular data and allows you to switch those applications to Wi-Fi only data.

Schmerling has found the app easy to use.

“It’s just toggle switches,” he said. “Any application on the phone is listed and you can just click on or off. Or you can just turn (cellular) data off with one switch.”

Republic plans to make its new pricing plan available to the public soon after the beta test, which is expected to last six weeks, is concluded.

But, Schniepp cautioned that timetable could change based on what the company learns from its beta customers.

This story was originally published May 23, 2015 at 4:00 PM with the headline "Raleigh-based Republic Wireless tries new plan where customers only pay for data used."