For $19, An Unlimited Phone Plan

A typical smartphone costs around $200, but it's usually shackled to a two-year contract that often costs $70 or more monthly and includes limits on data consumption, voice minutes and texts. Even prepaid smartphones, without a contract, can cost $30 to $50 a month and carry limits.

But I've been testing an Android smartphone from an upstart carrier that charges just $19 a month for unlimited data, voice and texts—with no contract. That's right: $19 a month, unlimited.

Republic Wireless

Motorola's Defy XT is the only phone that works with Republic's network.

However, as of Tuesday, the company is offering a second pricing option for people who would rather pay less up front: $99 for the phone and then $29 a month, unlimited. That's still a bargain service price. The phone and two service plans are only available online, at republicwireless.com. The company offers a 30-day money-back guarantee. And to sweeten the deal, Republic says Motorola will be offering customers a $50 credit at the Google GOOG +0.14% Play online store, where Android owners can buy apps and content.

Republic is mostly able to offer such low monthly prices because it's a Wi-Fi-centric carrier. That means whenever you make a voice call while the phone is connected to a Wi-Fi network, your Republic phone places it over Wi-Fi rather than using a costlier cellular phone network. The same is true of texts.

You aren't limited to Wi-Fi calling and texting—the phone can make calls, send texts and connect to the Internet over Sprint's cellular network, at no extra charge. But Republic believes so many people connect their phones to Wi-Fi so often that most calls and other activity will be conducted over Wi-Fi, saving the company money on payments it makes to Sprint. And it says it has developed a system that properly places 911 calls over Wi-Fi, which has often been a problem.

Wi-Fi phone calls aren't new, or unique to Republic. You can easily install an app on your iPhone or Android phone that will place calls over the Internet via Wi-Fi, just like Republic. But these apps generally require you to use a separate dialer and have a separate phone number.

Republic's phone is what it calls a "hybrid" device—the main dialer and text-messaging modules have been configured to work on either Wi-Fi or the cellular network, without the need to launch an app. The phone defaults to Wi-Fi but will place the call over Sprint if it decides the Wi-Fi connection isn't good enough, or if you manually choose cellular.

In my tests, conducted in and around Washington, D.C.; Los Angeles and Silicon Valley, call quality was adequate, text service worked normally, and Web browsing and apps mostly worked OK, at my home, office and public Wi-Fi hot spots in airports and coffee shops. But there were definite downsides.

First is the phone itself. The Defy XT is a chunky device with a lower-resolution screen than any current iPhone or leading Android model. It comes with only about 2.5 gigabytes of usable storage, compared with a more typical 16 gigabytes on other phones, though you can expand the storage by buying a larger memory card. It has a relatively small 3.7 inch display. And when it isn't on Wi-Fi, it can only use an older-type, slow, 3G network. Plus, it runs a clunky, old version of Android called Gingerbread that was released two years ago.

Republic says it plans to roll out several better phones running current versions of Android and much faster networks, including the best—4G LTE—starting in late summer.

Second, there's no seamless handoff between Wi-Fi calls and cellular calls. If you leave a Wi-Fi coverage area, the call drops, and, after a brief but annoying delay, the phone will redial the call over Sprint. Republic says it plans to roll out a feature this summer that will cut the handoff to seconds and make it nearly seamless.

Third is call quality. Wi-Fi calls have come a long way and in my tests, most were adequate, meaning the other person on the call and I could understand each other. But many of my calls had some slight echo effect or occasional clipped words, despite a recent software update intended to fix the problem. There was a noticeable improvement when I made the call on the same phone over Sprint.

The phone even displays a button during calls, called informally "the escape hatch," which allows you to kill the Wi-Fi call and force the phone to redial the other person over Sprint for no added charge. But in general, I found the Wi-Fi calling acceptable, if not pristine, as long as I wasn't walking too far away from the Wi-Fi hot spot.

Finally, there's almost no company-provided customer service. Republic relies on online forums of avid customers—its "community"—to provide help to users with problems. You can get help from an employee through these forums, but that's not typical.

If you can live with these limitations, Republic Wireless can save you a lot of money.

—Find all of Walt Mossberg's columns and videos at the All Things Digital website, walt.allthingsd.com. Email him at mossberg@wsj.com.

A version of this article appeared February 20, 2013, on page D1 in the U.S. edition of The Wall Street Journal, with the headline: For $19, An Unlimited Phone Plan, Some Flaws.

See video report here: http://online.wsj.com/article/SB10001424127887323495104578314122027573226.html