What do you think about your cell phone service? Do you like the two year contract, the credit check and the time it takes to get the phone set up? If you’re like other consumers, you’re tired of the contracts. In many industries contracts are a thing of the past because customers want more control over who they do business with but the cell phone industry still hangs on with their increasing prices and customer unfriendly contracts.
One entrepreneur is changing the traditional model. When Ahmed Khattak came to New York from Pakistan, he was surprised to find that he was unable to get a cellphone. He didn’t have traditional credit so passing the credit check to get on to a service contract with one of the full service carriers wasn’t possible. He asked his roommate to cosign for him and was able to qualify for a phone but what he went through gave him an idea to change the traditional model.
He had gone to London and found that he could purchase a SIM card that he could put in to an unlocked phone that would make local calls cheaper and wondered if that same model was possible in the United States.
When he returned, he started GSM Nation, with the purpose of giving customers the same cell phone options as people in the UK and other European and Asian nations. In order to secure funding for his startup, Khattak asked his dentist who would later give him $200,000 in startup funds. That initial investment turned in to $9 million in gross revenues during his first year.
The key, according Khattak, is to show potential customers the value of purchasing unlocked phones without locking in to a contract. One business owner claims that he cut his wireless bill by $10,000 annually.
But is the company still growing? In 2011, GSM reported $35 million in sales of phones and a $5 commission for each customer activation with a carrier listed on the site. What started as one frustrated customer’s idea grew in to a multimillion-dollar business.
GSM Wireless is another example of how somebody addressed a problem that most Americans deal with every day. He made the process of finding a cell phone hassle free, cheaper, and without a contract so customers were free to negotiate new deals as the market changed. Khattak hopes that his business not only continues to grow but also encourages the cell phone industry to follow a similar, no contract business model.