Solavei, the fast-growing Seattle area provider of mobile phone service, is facing a backlash from some of its members after the company announced a new rate plan which throttles the amount of data that they can use.
The company next week plans to institute a plan which cuts members’ data allotment from 4GB to 2GB, while keeping the monthly price the same at $49. Meanwhile, it is introducing a new $69 per month plan at 4GB; a new $39 per month plan for 500MB and a $29 per month plan for no data. The cut in data allotment is not sitting well with existing members, some of whom went to the company forums to let their feelings be known.
Many said that they will drop the service and stop marketing it to their personal networks, one of the ways Solavei has quickly grown to more than 250,000 customers.
Alan Mishell joined Solavei about nine months ago, but with the new rate plans he said he’ll be switching to T-Mobile.
“I understand they are free to change terms of service at will. I just think it’s a crap move,” he said.
Here’s a sampling from the forums of a few others who are upset by the decision.
This is total bull. This is exactly what the service rep said on the phone to me. As it stands, this month I have not yet used over 2GB of data, but many months I use between 3-4GB. This is a blatant change of the plan to half as much data or $20 more per month. Solavei is about to lose their most vocal supporters. The people who use more than 2GB of data are the ones who are connected to social media and are selling their product. Now they will be the ones who are leaving Solavei and telling everyone why to chose someone else. Get out while you can. Before this company goes under and you lose your phone number. You cannot port a number from a company that has gone out of business. Bye bye Solavei.
I have been with Solavei since Oct. 2012. Not 100% happy with the service as I get a lot of drop calls on the T-mobile towers here in Houston. I stay with Solavei because of the pricing plan of $49.00 and the business potential. I do make a little money with Solavie, but since the change, two of my customers who only use the service and not in it for business are highly upset and one is definitely leaving at the end of his next month and my guess is the other one that called me will also. The one who is definitely leaving refuses to pay the higher price for the same service and I don’t blame him (That’s a $20 jump). He uses the data for GPS directions for his business, but has never gone over the 4g.
I just purchased a bunch of marketing materials as I was going to ramp up my “sharing,” but now I will hold off. I can not promote this at this point as this is just not competitive. I join with the others in saying that we need to bring back the original $49 plan to stay competitive, otherwise Solavei will not last. People will leave and others will not come. Why would a service only member pay more money for less service. They won’t. They will just leave.
I also think that if they keep the $69 plan, at least allow tethering. Solavei execs, please listen to the will of the people who are the backbone of this business. Please don’t let this great company with great potential die of a slow bleeding wound.
Solavei has attempted to curtail some of the damage, writing in a response on the Web site that the new rate plans “give members the freedom of choice and the opportunity to save more.”
In an email to GeekWire, company spokesman Jason Genther said that they developed the new plans with “careful consideration” of how members use the service.
“We are very confident our members will greatly benefit with the new rate plans,” he said. “We now offer even greater choice and value starting at $29/month – and with these new rate plan(s), we’ll be passing along millions of dollars in savings to the members.”
Genther said that they reviewed the service, and found that the vast majority of members uses less than 2GB per month. In fact, half of the customers used less than 500MB.
“With our new rate plans, over 75 percent of our members will pay the same amount or less, and 50 percent have the opportunity to reduce their monthly bills by switching to one of the new plans,” he said. Even better is that the majority of those that use over 2 GB of data are earning monthly $20 or more through our compensation plan of sharing with others.”
Even so, CEO Ryan Wuerch recently took to YouTube to explain the rationale for the new rate plans, noting in the 9-minute video that “data is the most costly element for every mobile service provider.”
“It is very important that we, as a company, have a baseline, a sustainable offering that can serve as our core value proposition in the long term,” said Wuerch, adding that some users who used more than 2GB of data per month may feel “penalized” by the changes. He later goes on to say that the “Solavei social commerce revolution is in full effect,” describing the strong community that binds members of the service together.
To date, Solavei has paid out more than $18 million to its members. Last month, the company — backed by the likes of former AOL CEO Jonathan Miller, Amazon Kindle VP David Limp and others — said it was on a revenue run rate of $67 million.
Solavei has stirred controversy since it was started, drawing criticism for its approach of rewarding members for signing up friends, family and colleagues for the wireless service.
The company’s members have been vocal supporters and advocates of the service, but that could be changing with the new rate plans since members have promised a certain service level at a competitive price.
“This is a slap in my face after I’ve put in all the hard work to find the 4G for $49 plan for myself, and then turn around and advertise it to my friends/family, the least they could do is grandfather in the old plans,” wrote one user.
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