MVNO Karma goes live, selling a 4G hotspot made for sharing

Starting today Karma is asking consumers to engage in a unique social experiment. This new data-only mobile virtual network operator (MVNO) wants you to open your mobile broadband connection to all comers, turning your private 4G wireless modem into a public hotspot anyone can log onto. It sounds crazy, but there are rewards for your altruism: the more data you share the more you receive.

“There is an incentive for good behavior, which is why we’re called Karma,” co-founder Robert Gaal said.

After percolating all summer, Karma officially went live on Tuesday. It began accepting orders on its website for its $79 WiMAX hotspot, which taps into Clearwire’s 4G network in 70 cities.(s clwr) For that price you get free shipping and 1 GB of data that doesn’t expire. You can buy more bandwidth for $14 a gig, but if all goes according to Karma’s plans, it might be a while before you have to.

The Wi-Fi connections on all of Karma’s hotspots are open. Whenever the hotspot is on, anyone can latch onto its Wi-Fi signal, where they will encounter a welcome screen offering them 100 MBs of free data. That 100 MBs isn’t subtracted from the hotspot owner’s data bucket though; rather Karma awards the hotspot owner an additional 100 MB for making the connection happen.

A Karma customer could feasibly rack up a nearly unlimited amount of free data by simply leaving the hotspot on and open all day in public areas, though Gaal said in Karma’s beta trials the typical hotspot receives about five guests a week. Karma, however, is hoping that number will increase dramatically as word of mouth spreads and users learn to pick the Your Karma SSIDs from Wi-Fi network lists.

As for guests, they’re free to use that 100 MB in one sitting or spread it over several sessions, each from a different Karma hotspot. Karma tracks data use by tying you back to a Facebook account. Once that 100 MB is used up though, it’s gone. You can either sign up as a Karma customer or bid the service farewell.

Welcome to the social mesh

Karma launched in Amsterdam, but relocated to New York City last year to participate in TechStars and to find the 4G network required to make its shared mobile broadband experiment work. Karma calls its concept “social bandwidth,” but it’s an idea we’re seeing start to gain traction throughout the MVNO community and the wireless industry at large.

Karma staff MVNOFreedomPop, another Clearwire MVNO that just launched, is doling out network capacity on social principles as well, allowing customers to earn and trade megabytes like virtual currency. Ultimately, FreedomPop doesn’t want to sell access, it wants to sell services like VoIP that ride over a free or heavily discounted data connection.

FreedomPop is using those social features largely as a means to attract customers, which is Karma’s goal as well. As people encounter its open hotspots and free bandwidth in public, a portion of them will eventually turn into paying customers, who will in turn seed the country with more open hotspots, which will be used to recruit more customers. And since every Karma account is linked to a Facebook(s fb) profile, Karma is hoping to grow through traditional social networking as well.

But Karma sees social bandwidth as more than just a marketing tool. Rather it’s a more efficient way to deliver mobile data. What’s really revolutionary about Karma is how it’s decoupling the service from the device. It’s possible to be a paying Karma customer without ever owning a hotspot – you just latch onto whatever Karma Wi-Fi signal happens to available at any location.

Of course, buying a hotspot guarantees you’ll have connection rather than depending on chance. But Gaal said not everyone will have their hotspots with them at all times. If Karma can reach a certain scale, it can build a persistent network where enough hotspots are in the wild at any given time that Karma users are almost guaranteed of getting a signal in crowded public places like airports or city squares.

I’ll show you mine, if you show me yours

Many smartphonesThis concept of collective networking is starting to gain currency around the world through networks like Fon. Even carriers are starting to build social contracts into their services: In France, Iliad’s Free Mobile has a network of 4 million Wi-Fi hotspots, each of which hangs off of its residential customers’ home broadband connections. MVNO Republic Wireless is adopting a similar Wi-Fi-first approach.

The idea is that devices shouldn’t be designed to connect to specific networks. Instead, they should use the best network connection available. Perhaps the most radical proponent this sort of crowdsourced network is startup Open Garden, which is distributing software that links any device into ad hoc mesh networks. That network then connects to the internet through the fastest and most reliable link.

Open Garden’s approach is social bandwidth taken to its logical conclusion: every device has access to every possible connection and everyone benefits. But Gaal said consumers aren’t quite ready for such a radical approach in networking. They’re too accustomed to the idea that they own their connections to the network, and therefore they need incentive to share them.

“I do believe there is a huge opportunity there but there has to be a way to implement it so it doesn’t cost you,” Gaal said. “Mesh networks are awesome, but if only one person is footing the bill, not so awesome. If there is no value exchanged in the long run, it’s not a sustainable model.”

Image courtesy of Shutterstock user Reno Martin