A family’s cellphone bill could be among its top monthly expenses, and startup CellNuvo wants to make it a thing of the past.
The Chicago-based company, which launches broadly Thursday, thinks it can steal customers from the leading cellular carriers by offering free calling minutes, texts and data in exchange for users viewing ads. Each ad watched or survey taken translates to credits. One text uses one credit, while a minute of calling or 1 MB of data uses 10 credits.
“We are absolutely, 100 percent free instead of trying to fool people,” said founder and Chief Marketing Officer Tom Mannix. “You pay our $25 one-time activation charge; we never want to take another penny from you.”
Users enroll in CellNuvo by contacting the company to activate their accounts, then install the CellNuvo app on their phones. Currently, CellNuvo works on a variety of Android smartphones, with an iPhone version coming later, Mannix said. Users can download the app onto their own phones after a current contract is canceled or expires. They can also buy a phone directly from CellNuvo.
The app, Mannix said, cannot listen to calls, read texts or see what sites a user visits. It only tracks usage.
New users receive 2,500 credits upon activation, Mannix said. The system’s algorithm detects when users’ credits are running low and nudges them to watch ads or complete surveys to acquire more. By warning users before their credits drop to zero, CellNuvo doesn’t have to interrupt users when they are about to perform a task such as making a call or surfing the Web.
But, CellNuvo says, watching ads can eat up credits if done on a cellular connection instead of a wireless Internet connection. However, users earn more credits per ad than it takes to watch one, the company says.
CellNuvo “soft-launched” four months ago and has gained about 6,500 users, Mannix said.
Mannix said he began working on the idea of providing free cellphone services in exchange for ad views in late 2012. From there, he hired developers to build the app and algorithms that would understand customer usage patterns. But perfecting the business structure took the longest of the pre-launch tasks, Mannix said.
This was in part because CellNuvo’s decided to buy wholesale time from cell towers owned by major carriers, including Sprint whose 4G LTE Advanced network was a huge draw, Mannix said. CellNuvo is also working with another carrier whose name it can’t contractually disclose. It took almost nine months to go from signing agreements with the wireless carriers to integrating the service onto those networks, he said.
“We want to be a cell company. We want to provide access wherever you’re at,” instead of relying on Wi-Fi connections, Mannix said.
FreedomPop, a competitor in the space, says Wi-Fi offers better call quality than its own cellular network.
Stephen Stokols, CEO of FreedomPop, said his company offers users 500 MB of data, 200 calling minutes and 500 texts for free every month. Since launching in late 2012, Stokols said he’s noticed that users are more willing to buy additional minutes, data and texts instead of earning them by watching ads.
In the end, he said, carriers were willing to work with CellNuvo because they will continue to make money off the cellular bandwidth the startup buys from them.
But as ad blocking gains popularity, will users be willing to sit through ads for free access? Mannix said a CellNuvo user could earn enough credits in two to three minutes per day to cover their usage. He said the company surveyed cellphone users across the country to discern their attitudes about this model.
He said a high percentage of users “said that they’d be willing to view ads if it meant that they’re getting something of value.”
For users who aren’t ready for a fully ad-supported plan, CellNuvo also offers a $19 monthly flex plan. That fee buys users 5,000 credits per month, plus whatever they earn through viewing ads.
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“I think there’s going to be a tremendous amount of skepticism initially,” Mannix said, acknowledging that the plan may sound too good to be true at first.
But once users try the service and say goodbye to their cellphone bills, he expects that skepticism to disappear.