With $15M from Andreessen Horowitz, ItsOn wants to arm operators with options

Greg Raleigh knows a thing or two about big mobile ideas having pioneered MIMO technology and helping create the technology that went into Qualcomm’s Gobi product(s qcom). But he think he has an even bigger project on his hands, one that could change the way consumers sign up for wireless service with cellular operators.

Raleigh, who helped found Clarity Wireless and Airgo Networks, has teamed with wireless entrepreneur Charles Giancarlo, the managing director Silver Lake, on a stealth startup called ItsOn. The company is finally shedding its cloak of secrecy with the news that it’s raising $15.5 million in Series B funding, led by Andreessen Horowitz with participation from SV Angel and an investor group led by Jim Davidson.

ItsOn, which has been in the works for four years, has built a distributed cloud-based platform that augments existing cellular networks, allowing operators to offer a wide array of flexible service plans for consumers that can be tailored to a user, sponsored through partners or subsidized through an employer. Here’s some examples of how it could be used:

  • An operator could decide to create a plan that provides a flat data rate for a specific bundle of apps or websites.
  • A brand could decide to make a streaming event like a concert or football game free for mobile users in a certain area who interact with their ad.
  • A group of online retailers could offer reduced or free wireless service on a device in exchange for shopping through their sites and apps.
  • A small or medium sized business could set up their workers with phones and pay for specific data uses like VPN, intranet or email.

The idea is that consumers would be able to get a lot more choices of services and offers that help them manage their wireless bill, give them more control and avoid bill shock. They could just sign up for a service right on their phone or respond to a new offer. As their needs shift, they will be able to get prompts to buy different plans, which they can purchase on their phones.

For operators, they get the chance to experiment with new service plans, bring in money through sponsored plans and create packages that are profitable for specific services. They can also cut down on customer service and marketing costs by implementing ItsOn’s system, said Raleigh, and improve their customer churn. Operators would still offer their shared data plans and existing buckets of data, but ItsOn would allow them to create a whole new tier of services.


The system works by offloading a small amount of the workload normally handled by centralized networks to handsets, which can implement policies through their on-device software. Combined with ItsOn’s cloud infrastructure, it allows operators to create new packages and offers on the fly in a couple of days rather than months or more than a year. And these packages can target specific groups of users, at set times or in certain locations or geographies, something that was hard or impossible to do using traditional networks.

“It’s a whole new paradigm. The network is now distributed, it’s not the centralized networks of today,” said Raleigh. “By using cloud technology and applying it to mobile to augment and upgrade centralized gateways, we can create new models.”

ItsOn, which is based in Redwood City, CA and has 25 employees, previously raised $10 million from Vodafone Ventures (s vod), Verizon Investments (s vz) and Best Buy (s bby). Raleigh wouldn’t say which operator will be first to use ItsOn but he said the plan is to roll out service with a big U.S. carrier in early 2013 before moving on to Europe later next year. The company has already pulled in $10 million in revenue, said Raleigh, through trials of the service with an unnamed carrier.

I’ll be interested to see how ItsOn fares with operators and consumers. Giving operators more ways to make money, especially as they try to grab more data revenues in the face of falling text and voice revenues, should be attractive for some carriers. We’ve seen more deals by carriers to offer specific services like Facebook (s fb) or WhatsApp for free or a flat rate. Now, operators will be able to craft more plans to attract users and also rope in marketers, who can reach their subscribers with offers. I don’t know if many experienced smartphone users will jump for these new plans, but it could prove more popular with new smartphone users, who may still be wary of paying a lot for new mobile data usage.