A lot of talk has been focused on FreedomPop’s intention to give away loads of data and connect the iPhone to 4G, but it turns out the operator’s plans to launch a “freemium” mobile broadband service this 2012 are much more radical than known.
According to the company, FreedomPop plans to discard every trace of the traditional-carrier business model and adopt the strategy of a typical Web startup. It is not only giving away bandwidth but wants its customers to treat megabytes as a digital currency they can earn and trade. Instead of making its money through 4G access, FreedomPop is breaking one of the biggest carrier no-nos: It plans to sell services over a free dumb pipe.
FreedomPop’s vice president for marketing, Tony Miller, laid out many pieces of the company’s complex strategy. The mobile virtual network operator (MVNO) is developing a social network as well as a 4G service; it wants to connect devices that have never known mobile broadband connection; and it will market value-added services on top of those connections, possibly even voice.
To make money, Miller explained that 4G access is only a minor part of the revenue equation. FreedomPop will get inexpensive WiMAX connectivity from its wholesale partner, Clearwire, and it can afford to give most of that access away, he added. Customers who do not use much data each month will cost FreedomPop little. Those who consume a lot will surely move into metered data, which allows the carrier to easily recover its expenses.
The customer who poses an initial problem is the one who uses his entire cap each month without breaking or exceeding it, Miller stated. Eventually those mysterious value-added services Miller mentioned later will turn those customers into profitable investments. Miller would not give even a hint as to what most of those services would be, though he did mention the potential of VoIP.
“Speculatively, this is something we are considering,” Miller said. “We are not coming off the gate with a ‘cut the cord completely’ business strategy. We are launching first with mobile broadband. But down the road a VoIP service could be a future possibility.”
Noting that Skype co-founder Niklas Zennstrom is heading the launch of FreedomPop through Atomico, his venture capital firm, you would think VoIP has to be a strong consideration. Miller himself indicated to its planned launch of a WiMAX shell for the iPod touch, which FreedomPop or another over-the-top VoIP provider could easily transform into a softphone. “Some of these devices that were never intended to be phones can easily be transformed into them,” he stated.