Start-up MVNO Promises Free Data Access, Has Few Details on Business Strategy
When it comes to telecom services, nothing beats free... at least from the consumer side. But “free” in itself doesn't constitute a solid business plan, especially when the competition in mobile data networks is so fierce. But for MVNO start-up FreedomPop, “free” is both the marketing gimmick and the business strategy for the company's cheap and unlimited data plans via 4G mobile broadband. The yet-to-be-launched service has already garnered national headlines for its promise to connect everything from iPhones and other smartphones, to laptops and other hot spot devices. Last year, Skype co-founder announced his plan to start the unlimited data network, but specifics about the company are still few and far between. For now, it's clear that FreedomPop wants to create a buzz based on their unlimited, sharable data plans, but one question has yet to be answered: how will FreedomPop actually make enough money to be sustainable?
FreedomPop's vp of marketing Tony Miller says that, at launch, the company will initially offer up to 1 GB of connectivity free, with overages of one cent per megabyte. That level of free connectivity may be scaled back, as the company gains subscribers. Users will also be encouraged to share data, so that when one subscriber nears his data limit, he can borrow data allowances from a friend. As incentive, FreedomPop will award bonus gigabytes to users who sign up their friends. FreedomPop's real money will be made in the customer who continually exceeds data limits and runs into metered data (though the company has acknowledged that the real threat is the customer who regularly hits free data limits and never runs over).
Part of FreedomPop's ability (dare we say “freedom”?) to offer such discounted connectivity comes from the fact that the company didn't have to build its own network. Instead, FreedomPop buys wholesale from Clearwire. In doing so, FreedomPop says it will disrupt the price points of other wireless broadband providers and likely drive them to offer cheaper services. FreedomPop's website, while thin on the details, claims that the company “is the nation's first wireless Internet provider committed to delivering 100% FREE 4G mobile broadband Internet access” so that consumers can finally “replace” their “at home DSL and cable broadband Internet service today.”
That's the real war that FreedomPop is hoping to start, of course... that an MVNO start up could and should replace “traditional” providers. It remains to be seen whether FreedomPop will be successful— much less sustainable—but a combination of providers like FreedomPop could certainly put pressure on phone companies, cable companies, and other mobile broadband networks to lower rates.
But FreedomPop, which considers itself an “anti-carrier,” in a very clogged telecom industry, says that free 4G data access is just the beginning. Miller told GigaOm that the company plans to also incorporate social networking into their bandwidth-sharing business model, as well as offer value-added services. There is a potential for VoIP, too, Miller said. FreedomPop plans to launch services sometime this year.
Of course, FreedomPop isn't the first MVNO to try and lure customers away from traditional carrier via free access. NetZero recently announced it would offer a free data package, along with purchase of its new hot spot devices. Cary, North Carolina-based Republic Wireless (who's tagline is “the mobile network that runs on freedom”), also offers an unlimited data plan on its Wi-Fi and 3G hybrid network. Neither provider has succeeded in attracting a substantial number of customers, but some critics think this is where FreedomPop might have an edge: its association with Skype may make it more familiar to consumers.
Tuesday, May 8, 2012 at 11:22AM 