On Wednesday morning, Scratch Wireless burst onto the scene with $5 million in funding to bring the world a smartphone that is as close to "free" as it gets. The idea behind Scratch's service is that people don't like paying the high price of cellular contracts for talk minutes, texts and restricted data. Backed by investments from Common Angels, Scratch will prioritize Wi-Fi for calling, texting and data usage, rendering all of these services free.
When you enter into an area with existing Wi-Fi, a Scratch-enabled device connects to the network or asks you for a password the same way a Verizon or AT&T phone would. Texting is always free, but if customers use talk minutes or data when out of range of a Wi-Fi signal, they will still have access to all of the phone's capabilities via Sprint.
In order to keep costs low, the startup buys minutes and data wholesale from Sprint, which customers can then buy in day- or month-long passes. One day of minutes costs $1.99, and an additional $1.99 for 25 MB of data. A 30 day pass costs $14.99 for both 250 minutes of talk and 200 MB of data.
International calling, texting and data is also free when you are on Wi-Fi; however, roaming rates apply if you go off the network.
"This has been a long time coming," Scratch Founder and CEO Alan Berrey told BostInno. "We had a five year initiative to make sure we had a good, organic feel on the Android platform. We want the experience of using Wi-Fi to be the same, if not better then the other big [service providers]. People like the fact that you can get a phone without being tied to an expensive monthly service."
Despite the stiff competition in the space, the Scratch team believes that this is a real gap they are about to fill.
"Our target audience and early adopters will be people who have Wi-Fi access most of the day," said Scratch Vice President of Marketing Jon Finegold. "They are people who want a smartphone on the cheap. They are heavy texters and data users because people who are primarily talk users will be skeptical of voice over Wi-Fi," said Scratch Vice President of Marketing, Jon Finegold.
Scratch will be launching in Q4 2013 on the Motorola Photon Q, and will be expanding onto other Android devices in the future. There is no current plan to expand to the iPhone, but if Scratch makes enough noise, the big boys will have to pay attention.
