FreedomPop’s plans to launch a ‘freemium’ mobile broadband aren’t just ambitious, they’re a bit zany – zany bordering on genius. Instead of providing a stand-alone smartphone and dealing with pesky issue of providing voice, it’s leveraging its data-only deal with Clearwire to sell a WiMAX modem shell. Customers then fit that shell over iPhone 4 or 4S and get instant broadband access. Getting the iPhone itself – and accompanying voice plan – appears to be the customer’s concern. But FreedomPop is providing them a lot of incentive to go to the trouble: 1 GB of free data.
TechCrunch broke the story on Tuesday and FierceWireless confirmed it with FreedomPop VP of marketing Tony Miller, though some of the details are still fuzzy. It’s not clear, for instance, if the 1 GB is a one-off deal, which switches over to metered data plans once the initial bucket is used up, or if it’s a recurring month-to-month allotment of gratis data. Either way, FreedomPop plans to get paid. After customers use up the gig they’ll be charged a 1 cent for every additional megabyte consumed, Miller told Fierce, which falls in line with what the average $10 per gigabyte most of the major operators charge for overages.
The WiMAX shell is essentially a mobile hotspot, which connects to the iPhone and up to 8 other devices through Wi-Fi, according to TechCrunch, and Fierce reported the roughly $75 cost of the shell will be fully refundable once service is canceled, as long as it’s still in relatively good shape.
FreedomPop’s WiMAX deal with Clearwire has its limitations. Its 4G network covers 130 million people today, but Clearwire hasn’t announced any plans to continue its nationwide expansion. The bring your own iPhone model could present a problem as well, as AT&T, Verizon Wireless and Sprint, all require you to sign up for a data plan when activating the iPhone. Even at a bare minimum plan, customers will still be forking over $15 to $20 a month for data connectivity they may have no intention of using.
What would be interesting is to see if FreedomPop sparks a movement toward buying unlocked iPhones. Customers could theoretically get a micro-SIM from AT&T or T-Mobile for a voice-only plan, and then use FreedomPop’s WiMAX for data, falling back to Wi-Fi where 4G is unavailable. The price of entry is steep though. Apple started selling an unlocked version of the iPhone 4S in November for $849.
The other big question is how FreedomPop can sustain such a business model if it truly does give away 1 GB a month for free. According to a recent report from wireless analyst Chetan Sharma, only the top 30 percent of U.S. smartphone users consume more than 1 GB a month. FreedomPop will likely attract a lot of hard-core data users in the 30th percentile, but there’s a good possibility many customers will never breech that 1 GB cap. NetZero is also trying its hand at a free 4G service – and is also using Clearwire’s network – but it’s drawing the line at 200 MB a month before it expects customers have to sign up for a paid plan.