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InPhonic Inc (NASDAQ: INPC) is a company that sells wireless services and devices online, both through its e-commerce site Wirefly and through private labeled websites it creates and manages for online retailers. The board of directors includes such notable names as would-be VP Jack Kemp and John Sculley (formerly of Pepsi Co and Apple).

The company was modeled after sites like Expedia, which helped consumers navigate to the best and cheapest deals by aggregating pricing information from competing companies into a single site. The appeal to wireless carriers in partnering with InPhonic was that carriers had to spend an average of $380 for each new customer who signs up at a retail store. Online customer acquisition was nearly $100 less, which meant savings for both the carriers and the consumers. In return, the carriers pay InPhonic a commission for each customer provided the customer meets a number of criteria.

The wireless company, founded and headed by David Steinberg, went public in November 2004. Inc Magazine listed InPhonic as the #1 company of 2004. The wireless phone company raised $108.9 million through its initial public offering. The IPO was InPhonic's second attempt to tap the public markets. The company filed to go public in 2002 but canceled the offering because of tough market conditions.

In January 2005, it bought competitor A1 Wireless for $10 million, and a few months later it purchased VMC Satellite, a player in the satellite TV industry, for $11 million.

The company's Wirefly site has received a number of Internet awards, including Forbes magazine's Best of the Web for 2004.

The company is headquartered in Washington, D.C. and maintains technology and operations centers in Largo, Maryland, Long Island City, New York and Reston, Virginia.

Partners and Affiliates

In addition to Wirefly, InPhonic operates some 6,000 other private label cell phone sales Web sites, according to company spokesman Tripp Donnelly. The firm said in early 2006 that it was the largest third-party online cell phone retailer in the US, accounting for one-third of the market, and that it sold 850,000 cell phones in 2005 alone.

Partners include brands such as Radio Shack, Cognigen, and AOLMobile.com and others, which sell wireless phones and cell phone service plans from major carriers like Verizon Wireless, Cingular, T-Mobile, and others. InPhonic also runs fulfillment for OEMs like the Motorola and LG brands.

In addition, it allows owners of smaller sites to monetize their own web pages through the LinkShare Affiliate Program.

In 2005, InPhonic sold its mobile virtual network operator, or MVNO, called Liberty Wireless.

Cell phone pricing, rebates, and complaints

InPhonic became popular for its aggressive pricing strategy, which includes "free cell phones after rebate" or discounts worth several hundred dollars. The terms of the rebates however require the customer to wait 180 days after activation, but no more than 210 days, to file the rebate. This unusual rebate model stems from the fact that the carriers will not pay a commission on a customer who does not maintain service for six months. This strict requirement has fueled outrage among a group of customers who are calling for the regulation of rebate incentives by electronics manufacturers and retailers.

In November 2005, as a result of over a thousand complaints from consumers who claimed they were unjustly denied multiple rebates, InPhonic's Washington, DC, BBB membership was revoked.

External links

• Wirefly.com
• InPhonic corporate site
• Washington Post profile of InPhonic
• Consumers Irked by Cell Phone Rebates on Hold, MSNBC.com, January 13, 2006
• FAQs on submitting Wirefly rebates

• Cellular telephone companies of the United States