USA Map Abstract Showing Concept Of Network Connections

Helium Mobile Goes Nationwide

In August, Helium Mobile launched a $5 per month unlimited plan that was exclusively available in the Miami area. At the time, I wrote:

Itโ€™s arguably the cheapest unlimited plan on the US market. But the price is kind of contrived.

Peter Adderton, founder of Boost Mobile and current CEO of MobileX, offered a valid correction:

Nationwide Service – $20 Per Month

Today, Helium Mobile launched expanded service. While $5 per month pricing continues for those in the Miami area, people throughout the US can now get service for $20 per month plus taxes.

It’s a pretty sweet deal for what’s essentially T-Mobile service. I’m not confident it’s the cheapest unlimited plan in the US, but it’s a strong contender. In all but the most tax-intensive locations, I think Helium Mobile comes out cheaper than unlimited plans from US Mobile and Visible that start at $25 with taxes baked in.1

2 Points People Miss

I’ve been disappointed by the press coverage of Helium Mobile (both positive and negative). Journalists are missing two key points:

  1. The Helium project has an ambitious goal of building out a network that could allow Helium Mobile to achieve cost savings over conventional MVNOs. Meaningful cost savings have not been achieved yet.
  2. Today, Helium Mobile’s low prices are enabled by what’s effectively a subsidy from investors.

While a $20 plan may not be as unprofitable as a $5 plan, a small MVNO will still take significant losses on a mass-market plan at that price point. That said, it’s pretty normal for new carriers to offer plans that aren’t profitable in hopes of one day reaching economies of scale or achieving new kinds of cost-efficiency.

How Much Does The Average American Pay For Cell Service?

In a Tweet, Helium Mobile compared its $20 per month rate to a $157 per month figure from JD Power. The latter figure allegedly represents what the average American spends on their phone plan.

In a press release, Helium Mobile doubles down on the comparison and describes its new offering as such:

Unlimited data, text and talk that is almost 8X more affordable than the average U.S. cell bill

$157 is the wrong number for the comparison Helium Mobile is making. It’s way too high.

JD Power charges for access to the study, so I’ll only speculate. I’d guess JD Power is looking at the average expenditure of entire households. Most households have multiple people and multiple phone lines. Perhaps the costs of device subsidies or device financing are also sneaking into JD Power’s numbers.

I don’t think prospective customers are being harmed. People care about (1) what they pay for their current carrier and (2) how much less they might pay for Helium Mobile. The average American is irrelevant. Perhaps the comparison could confuse investors, but I doubt many are getting fooled. More than anything else, pushing the $157 statistic makes Helium Mobile look silly.

Helium Mobile’s $5 Unlimited Plan

Helium Mobile is coming out of beta and offering an unlimited plan for $5 per month.1 It’s arguably the cheapest unlimited plan on the US market. But the price is kind of contrived.

Helium Mobile’s Networks

First some background details. Helium Mobile is an MVNO running over T-Mobile’s network. However, the carrier has a novel differentiator. It supplements T-Mobile’s coverage with coverage from Helium’s network of CBRS radios.

The Helium network has roughly 10,000 CBRS radios scattered throughout the country. I won’t get into the weeds here, but Helium got normal people to set up these radios by incentivizing them with the project’s cryptocurrency tokens.

The radios making up Helium’s network are weak and usually poorly located. Helium hasn’t (yet) figured out mechanisms to adequately incentivize good placements. While I don’t know how much area Helium’s network covers, I’m confident it’s far less than 1% of the US by land area.

Currently, Helium Mobile is only accepting signups from people in Miami.2 Helium may be able to build a denser network in Miami than it has in the wider US. But for now, Helium’s coverage footprint within Miami is tiny compared to T-Mobile’s footprint in the city. That will remain true for the foreseeable future.3

How Is Helium Mobile So Cheap?

Nova Labs, the company behind Helium Mobile, raised a ton of money from crypto-adjacent venture capital firms. The $5 price is only possible through subsidization.

It’s normal for new MVNOs to start with prices slightly below their costs while betting that the cost per subscriber will fall after hitting economies of scale.

Helium Mobile is making a bolder bet. At $5 per month, Helium Mobile is taking a huge loss on each subscriber. Helium Mobile is betting on the regular economies of scale while also hoping for a second shift in its underlying cost structure.

While I don’t know the actual numbers, Helium Mobile probably pays a few bucks for each gigabyte of data on T-Mobile’s network. On the Helium network, data comes in at $0.50 per gigabyte. If Helium Mobile gets enough data flowing over Helium’s network, it could achieve a better cost structure than other MVNOs.

Could the cost structure become so good that Nova Labs actually turns a profit on a $5 per month unlimited plan? No. I don’t think that’s Nova Labs’ ultimate goal, though.

A Real-World Crypto Use Case?

Nova Labs’ COO shared this post on Twitter yesterday:

In my view, the “real world crypto use case” point is aspirational. Or perhaps it has been realized but in a convoluted way. Crypto allowed Nova Labs to raise a bunch of funding. That funding is subsidizing what is, for the moment, a largely conventional cellular service.

Integration Woes

Conventional roaming allows a phone to switch networks when it enters an area where the usual network lacks coverage. I expect Helium wanted to offer something better: seamless coverage with phones intelligently switching between multiple networks serving the same location.

Dynamic network switching of that sort is a technical challenge. It probably takes a lot of buy-in from the networks involved. As far as I can tell, Helium couldn’t pull off this kind of integration with T-Mobile.

For now, Helium Mobile relies on a less streamlined approach. Subscribers must use multiple SIM cards for their service. According to anecdotal reports, handoffs between T-Mobile’s network and Helium’s radios are clunky. For technical and regulatory reasons, Helium’s radios only support data traffic. T-Mobile handles texts and calls.

Scaling Challenges

A $5 price point may attract a lot of customers. More customers means a larger volume of customer support queries. Initially limiting service to Miami may ease the burden of support queries, but I expect Helium Mobile will have to either prioritize building a massive customer support team or settle for a lousy standard.

The Bright Side

While performance issues and integration difficulties plague Helium’s cellular network, there are tractable paths forward. Helium Mobile’s ridiculously low price point may make subscribers more tolerant of bumps in the road as Helium Mobile fine-tunes its service.

Recently, Nova Labs has been teasing an upcoming WiFi product. It’s too soon to say anything confidently, but the product may allow the Helium community to sidestep many of the regulatory and technical challenges cellular presents.

The People’s Network?

Nova Labs’ CEO shared a nice sentiment in a recent blog post:

For most of history, technology has been held tightly in the grasp of the few โ€” from monarchies and aristocracies to corporations and billionaires. The internet, despite its ability to create instant and open communication with each other, is no exception: it came at a price that many cannot afford.

We believe technology โ€” especially the internet โ€” should be the inheritance of the whole human race. We are all its heirs, and access should be in the hands of the people.

There’s a history of telecom companies talking a big game about connecting the unconnected and other pro-social goals while ruthlessly pursuing profits and screwing consumers. Something similar could be said about much of the cryptocurrency ecosystem. Will Helium buck the trends and lean into its high-minded ambitions?