But starting Wednesday FreedomPop is selling a new hotspot modem that connects to Sprint’s nationwide CDMA EV-DO network. The modem will likely clock sub-megabit 3G speeds when on Sprint’s network, but it will connect to any Clearwire tower when available. That allows FreedomPop to give its current customers nationwide coverage as well as market the service to customers outside of Clearwire’s 80-city footprint.

As we’ve reported, FreedomPop eventually plans to tap into Sprint’s new LTE network, allowing it to wean itself off Clearwire’s WiMAX systems (it will keep its home broadband service with Clearwire though). According to CEO Stephen Stokols, FreedomPop will start selling an LTE-CDMA hotspot in about six months. He added that the mobile virtual network operator (MVNO) wants to wait until Sprint builds up its LTE footprint before making the leap. Right now Sprint has 88 cities and towns under its LTE umbrella, but plans to make a big expansion push this summer.

FreedomPop is only selling a hotspot, the Overdrive Pro, on the new network. It’s signature device, a sleeve modem designed to fit around the iPhone 4 and 4S is still AWOL, caught up in the Federal Communications Commission’s testing process. Stokols said he still holds out hope that the device will clear those tests soon. That’s probably of little consolation to the customers who pre-ordered the device last May, but Stokols said he’s hoping that a belated approval will clear the path for an iPhone 5 sleeve later this year.

Even without the Sleeve, FreedomPop has been growing rapidly as consumers latch onto its free 500 MB of monthly data and its bandwidth sharing and earning features, as well as its hotspots and iPod Touch sleeve, Stokols said. He wouldn’t reveal exact subscriber numbers saying only the virtual carrier has “hundreds of thousands” of customers. FreedomPop also plans to launch a voice service in the next few months via a partnership with VoIP and IP messaging provider textPlus.

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“There is an incentive for good behavior, which is why we’re called Karma,” co-founder Robert Gaal said.

After percolating all summer, Karma officially went live on Tuesday. It began accepting orders on its website for its $79 WiMAX hotspot, which taps into Clearwire’s 4G network in 70 cities. For that price you get free shipping and 1 GB of data that doesn’t expire. You can buy more bandwidth for $14 a gig, but if all goes according to Karma’s plans, it might be a while before you have to.

The Wi-Fi connections on all of Karma’s hotspots are open. Whenever the hotspot is on, anyone can latch onto its Wi-Fi signal, where they will encounter a welcome screen offering them 100 MBs of free data. That 100 MBs isn’t subtracted from the hotspot owner’s data bucket though; rather Karma awards the hotspot owner an additional 100 MB for making the connection happen.

A Karma customer could feasibly rack up a nearly unlimited amount of free data by simply leaving the hotspot on and open all day in public areas, though Gaal said in Karma’s beta trials the typical hotspot receives about five guests a week. Karma, however, is hoping that number will increase dramatically as word of mouth spreads and users learn to pick the Your Karma SSIDs from Wi-Fi network lists.

As for guests, they’re free to use that 100 MB in one sitting or spread it over several sessions, each from a different Karma hotspot. Karma tracks data use by tying you back to a Facebook account. Once that 100 MB is used up though, it’s gone. You can either sign up as a Karma customer or bid the service farewell.

Welcome to the social mesh

Karma launched in Amsterdam, but relocated to New York City last year to participate in TechStars and to find the 4G network required to make its shared mobile broadband experiment work. Karma calls its concept “social bandwidth,” but it’s an idea we’re seeing start to gain traction throughout the MVNO community and the wireless industry at large.

FreedomPop, another Clearwire MVNO that just launched, is doling out network capacity on social principles as well, allowing customers to earn and trade megabytes like virtual currency. Ultimately, FreedomPop doesn’t want to sell access, it wants to sell services like VoIP that ride over a free or heavily discounted data connection.

FreedomPop is using those social features largely as a means to attract customers, which is Karma’s goal as well. As people encounter its open hotspots and free bandwidth in public, a portion of them will eventually turn into paying customers, who will in turn seed the country with more open hotspots, which will be used to recruit more customers. And since every Karma account is linked to a Facebook profile, Karma is hoping to grow through traditional social networking as well.

But Karma sees social bandwidth as more than just a marketing tool. Rather it’s a more efficient way to deliver mobile data. What’s really revolutionary about Karma is how it’s decoupling the service from the device. It’s possible to be a paying Karma customer without ever owning a hotspot – you just latch onto whatever Karma Wi-Fi signal happens to available at any location.

Of course, buying a hotspot guarantees you’ll have connection rather than depending on chance. But Gaal said not everyone will have their hotspots with them at all times. If Karma can reach a certain scale, it can build a persistent network where enough hotspots are in the wild at any given time that Karma users are almost guaranteed of getting a signal in crowded public places like airports or city squares.

I’ll show you mine, if you show me yours

This concept of collective networking is starting to gain currency around the world through networks like Fon. Even carriers are starting to build social contracts into their services: In France, Iliad’s Free Mobile has a network of 4 million Wi-Fi hotspots, each of which hangs off of its residential customers’ home broadband connections. MVNO Republic Wireless is adopting a similar Wi-Fi-first approach.

The idea is that devices shouldn’t be designed to connect to specific networks. Instead, they should use the best network connection available. Perhaps the most radical proponent this sort of crowdsourced network is startup Open Garden, which is distributing software that links any device into ad hoc mesh networks. That network then connects to the internet through the fastest and most reliable link.

Open Garden’s approach is social bandwidth taken to its logical conclusion: every device has access to every possible connection and everyone benefits. But Gaal said consumers aren’t quite ready for such a radical approach in networking. They’re too accustomed to the idea that they own their connections to the network, and therefore they need incentive to share them.

“I do believe there is a huge opportunity there but there has to be a way to implement it so it doesn’t cost you,” Gaal said. “Mesh networks are awesome, but if only one person is footing the bill, not so awesome. If there is no value exchanged in the long run, it’s not a sustainable model.”

Image courtesy of Shutterstock user Reno Martin

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The first plan costs less than the one it replaces, which may get some consumers to choose the service. For a $20 monthly fee, there’s a lower entry point, but a lower amount of data as well: Customers will have 2 GB of mobile broadband use to share over Wi-Fi from their phone.

Power users may need the new $50 plan, which provides 6 GB of service. That means people on the old plan who decide not to keep it will gain one gigabyte of sharable broadband but end up paying $20 more than before.

According to Sprint, it will begin to help customers monitor their mobile hotspot usage:

“Sprint now will be able to notify customers with a MHS add-on when they reach 75, 90 and 100 percent of their on-network monthly data limit. Sprint provides data usage notifications to help customers to proactively manage their MHS usage and adjust usage to avoid high overage charges. Customers must enroll to receive usage notifications. At 100 percent of their on-network monthly data allowance, customers will receive a notification with the option to suspend on-network mobile hotspot usage or continue to use it and pay the overage charges. If the customer chooses to accept overage charges, they will continue to receive notifications at 20 percent increments above the monthly data allowance.”

Good for Sprint that it’s helping users keep tabs on their limited mobile broadband as overages will add up at $0.05 per megabyte.

Still, there’s some confusion in the new plan as Sprint says when the mobile hotspot feature (MHS) is turned on “both MHS and phone data usage pull from the MHS monthly data allowance.” That means use of the unlimited data offered on the phone during hotspot usage will hit the hotspot plan cap. Mobile broadband multitaskers: You’ve been warned!

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Some of you may be crying foul right now, but in fairness to FreedomPop, it has never said every customer will get an automatic 1 GB bucket every month – at least not to us. In an interview with GigaOM in March, VP of marketing Tony Miller said FreedomPop aimed to give away a large block of free data each month, and while its target was 1 GB, it wasn’t set in stone. In addition, FreedomPop’s plan was to turn data into a digital currency, which customers could earn and trade. Customers could earn more megabytes by referring people to FreedomPop and by signing up for the carrier’s still unidentified value-added services. Also, customers who don’t use up their monthly data allotments can transfer their extra megabytes to friends.

The basic structure of its free data model is now starting to emerge. According to its Website, customers who order the iPhone sleeve will get 500 MB free each month, but it appears customers can increase the size of their free buckets to 1 GB a month, though FreedomPop isn’t saying how just yet. After customers use up their free buckets, they will be charged at a base rate of 1 cent per megabyte.

The Freedom Sleeve iPhone shell — which triples as a spare iPhone battery and a mobile hotspot — will tap into Clearwire’s WiMAX network so coverage will be limited to its 72-market footprint. While FreedomPop is taking pre-orders for the device online, it is also checking addresses to make sure you’re in a 4G market. That makes sense since FreedomPop doesn’t have a 3G — or any other — network to fall back on. You’re either in WiMAX coverage or you have no service.

The virtual operator is also scrapping the original deposit model it described. You buy the sleeve upfront for $99, though it seems that at any time you can return the sleeve in good condition for a refund, which amounts to the same thing. TechCrunch is reporting that FreedomPop is making the change for accounting reasons, allowing it to manage the device orders as revenue, not deposits.

When ordering the device, FreedomPop guarantees that you will receive your sleeve “before the rest of the world.” That’s not terribly helpful, and the wait could wind up being a few months. FreedomPop has said it would go live in the third quarter, which begins July 1, and in a press release issued Thursday it said would launch its beta service sometime this summer.

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Yesterday, when Apple announced the new iPad, it also touted that the new iPad will be able to offer “mobile hot spot” like features, allowing you to share your super-fast wireless broadband connection with five devices. This prompted folks at Fool.com to ask: did Novatel and Sierra Wireless get Garmin’d?

Garmin, if you remember was a maker of GPS devices, that predictably was relegated to marginal existence by iPhone and then a range of smartphones. In other words, Garmin, the device became an app. So from that perspective, Fool.com is right in asking the question. The stock market agreed as well and the shares of two companies declined.

Their question made me think about the future of mobile hotspots. Clearly, a nice market to begin with, the need for hotspots keeps decreasing as more devices such as the iPads and iPhones come packed with WiFi and mobile broadband connectivity. We are also seeing people replace laptops with the tablets on their short trips and thus decreasing the need for mobile hotspots. And the ability to share connections via the iPad/iPhone/Android phone is going to kill the demand from casual hotspot owners. I am one of the casual owners — once I got the Verizon iPhone, I stopped using my dedicated mobile hotspot device

However, there is one problem with the Pad or phones-as-a-hotspot — battery life. The sharing kills the battery faster than Highlight app notifications. And I think this is the big edge for the dedicated hot-spot makers. They could come up with innovative designs and at the same time work on increasing the battery life of their device. I am thinking they should be taking a cue from the modem makers of the old. Remember when ISDN/DSL because a threat to their business, some modem makers started offering higher speeds by using bonding technologies. I wonder if Novatel and Sierra Wireless can provide a faster, and longer lasting wireless hotspot experience.

Bear in mind that not all phones are likely to see the update at the same time. Typically these are staged in waves, so if your handset doesn’t have an update today, I’d keep checking, or simply rely on the phone to notify you when the software becomes available.

We first heard of the hotspot feature in August, so it’s been a long time coming; especially when you realize that most other smartphone platforms have long had the ability to share their mobile broadband connection over Wi-Fi.

Using the phone as a hotspot vs. using a dedicated MiFi device is always a good debate, but ultimately comes down to a personal preference. If I’m using a phone that either has an integrated battery or one where I don’t have a spare battery, I rely on a MiFi. When I happen to have a second battery for a handset, I don’t mind using the hotspot feature, which drains the battery faster than standard use.

Now that Microsoft phones have Internet sharing, what are you looking forward to next? For me it would be true over-the-air software updates. Connecting my phone to a PC or Mac just to download and get updates feels very 2007-ish to me.

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The new devices come at a time when the no. 4 U.S. carrier has spent much of this year upgrading its mobile broadband data network. In 2010, T-Mobile boosted the network to 21 Mbps speeds and wasted little time in doubling the network speeds in 2011 with HSPA+ 42 wireless capability and additional backhaul to cell sites. That’s because the carrier is seeing data consumption double every six months.

The increased speeds are helping to quickly transition T-Mobile customers to smartphones that generate increased data revenues. In a phone conversation with Cole Brodman, T-Mobile’s Chief Marketing Office, he told me that “75 percent of the phones T-Mobile sells this year will be smartphones, and of those, 90 percent are Android.”

Without an Apple iPhone, the Android figure makes sense and the overall percent of smartphones sold is higher than the industry, which is estimated to be around 55 percent of all phones sold in the U.S. this year, according to Chetan Sharma, an independent telecom analyst.

As far as the new phones themselves, the Galaxy S II will look familiar as both Sprint and AT&T have introduced their versions. One immediate difference in T-Mobile’s Galaxy S II, aside from the 42 Mbps radio, is a larger, 4.52-inch Super AMOLED Plus display.

The phone also has NFC capability, although Brodman told me the feature won’t be used at launch. Most other specifications are similar or the same: a 1.5 GHz dual-core processor (from Qualcomm, not Samsung), 16 GB of storage capacity with expansion up to 48 GB, an 8-megapixel rear camera, 2-megapixel front camera and HDMI output.

The new HTC Amaze 4G with Sense 3.0 is also a powerful smartphone, using the same 1.5 GHz dual-core CPU but with a 4.3-inch qHD (960×540 resolution) Super LCD screen. However, the HTC Amaze 4G is positioned as a top-notch camera device with simple sharing on the fast HSPA+ network.

The wide aperture f/2.2 camera — good for low-light conditions — uses an 8-megapixel sensor. A few new scene modes, similar to those found on T-Mobile’s HTC Sensation 4G, are included to enhance the image-taking experience:

• SmartShot takes five pictures and combines the best attributes of each to capture smiles and eliminate blinking eyes.
• ClearShot HDR creates high contrast images.
• SweepShot captures wide panoramic views.
• PerfectPics intelligently surfaces the best or most meaningful photos into a separate photo album.

The phone also boasts zero-shutter lag, face detection, 1080p HD video capture and a five-image BurstMode. Images can be shared natively to Facebook, Picasa and Flickr.

Those who prefer to use laptops and tablets on T-Mobile’s HSPA+ network may be interested in the Sonic 4G Mobile Hotspot. The 3.88 ounce device shares its mobile broadband connection with up to five devices over Wi-Fi and has a 32 GB microSD card slot to save and share data across the personal hotspot network. A small OLED display shows the number of connected devices, signal strength and battery life, which is estimated at 4.5 hours of continuous use.

Both new handsets will be available for online orders starting Oct. 10 with widespread retail availability two days later. T-Mobile’s Samsung Galaxy S II, is priced at $229.99 with contract and after a $50 mail-in rebate, while the HTC Amaze 4G will cost $259.99 with contract and after the same $50 mail-in rebate. T-Mobile hasn’t set a price for the Sonic 4G but expects it to be available in stores before the end of October.

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To be sure, the YouGov poll results I read via the MocoNews blog are specific to the United Kingdom, but they should act as a reasonable proxy for any region that has both a mature mobile broadband infrastructure and a growing number of smartphone users. So I suspect similar customer behaviors elsewhere in Europe and in the U.S., for example. And using a phone for a mobile broadband connection isn’t exactly new: back in 2006, my mobile setup used an inexpensive piece of software that turned my Windows Mobile phone into a 3G modem. But that solution required a USB cable and was only good for a single device connection. Fast forward five years, and now our phones are wireless hotspots for up to eight devices.

As consumers become both more tech-savvy and cost-conscious, a mobile broadband dongle makes less sense for most. Why? The data stick is just as limiting as my 2006 solution; it’s good for a single device only, which is the same problem found with an integrated solution on a notebook. Some may find software to share that single connection, but most won’t. And with a data dongle typically comes a lengthy commitment, at least here in the U.S., which means a completely separate data plan for up to two years. That’s not an appealing prospect as compared to adding the wireless hotspot feature to a handset, often for less money. There’s no commitment either; the phone-as-hotspot is much like the text messaging part of a plan. You can drop the functionality in a given billing cycle or add it again later.

Like so many technical solutions, however, there’s a downside to wirelessly sharing an Internet connection from a smartphone: battery life. A phone in wireless hotspot mode uses two radios at the same time: one for the cellular connection to the web and one to share that connection over Wi-Fi. So a typical phone in hotspot mode could run the battery dry in as little as four hours, leaving you with no web connection and, even worse, no phone. That gives hope to folks like Novatel Wireless who make the standalone MiFi devices, but if smartphones can improve upon their battery life, the MiFi could go the way of the dongle: to the deadpool, replaced by the multi-purpose smartphone.

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Using data from the Novatel Wireless investors site and press releases, I charted the reported revenues from MiFi sales since the company’s second fiscal quarter in 2009, which was the first quarter I could find with MiFi sales information. Data wasn’t provided for the last quarter in 2009, so I estimated it based on the company’s reported revenue mix of Mi-Fi devices versus other revenues. Even if my estimate that quarter is low, the MiFi sales revenue trend is flat to down at a time where connectivity needs are rising.

When I saw my first MiFi back in January 2009, I thought it was a completely innovative product: one small device with one data plan supplies the mobile broadband connection to five or more devices over Wi-Fi. I liked it so much that I bought one on Verizon’s network, and to this day, I still have it and pay $35 for 3 GB of monthly data. Now that the MiFi is entering a third year of availability at a time when mobile broadband subscribers are about to surpass wired broadband subscribers, you’d think there would be an increasing number of MiFi customers like myself. But there aren’t.

Part of any downward trend in sales could be attributable to lower device pricing, but even so, I’d expect the trend to at least be flat in that case: lower prices should make the device more attractive to carriers and customers and therefore revenues would likely still increase. I think that people still don’t know what a MiFi is, which could be hurting adoption. In any case, exact sales numbers in terms of units aren’t available, so let’s consider my chart to be a reasonable proxy.

On top of the lack of MiFi sales growth are the growing number of devices that can be used as a hotspot. In my particular case, both my phone and my tablet can share their 3G connection. In fact, I took my standlone MiFi to CES last week but never fired it up because I have the same functionality duplicated in two other devices that I already had with me. As more handsets include the ability to share a connection, even with an additional fee, a MiFi device seems less attractive.

There’s a few arguments against this line of thought, and of course, each individual’s mobile needs will vary; if a MiFi works for you, then you should keep using it. Using a phone or tablet as a mobile broadband hotspot certainly causes the battery level to drop faster. For this reason, I use one of my mobile mantras: Always buy and carry a spare battery for any mobile device if you can. Toting a second battery for my phone, for example occupies less space and weighs less than the MiFi.

However, devices based on CDMA network technology, such as all of Verizon’s current handset lineup, including the new iPhone, can’t be a hotspot and take calls at the same time. That’s another point in favor of the MiFi, but as Verizon moves smartphones to its LTE network this year, the problem could be mitigated in the future if voice traffic flows on CDMA while data stays on LTE. That may not happen until voice standards are implemented for LTE, however, so Verizon voice could rely on CS Fallback from LTE back to CDMA, which would still preclude simultaneous voice and data.

Novatel Wireless, which has bet big on the MiFi solution, is trying to add value to the device by adding the ability to run apps, but in the long run, I don’t think that will matter. I haven’t yet seen a MiFi app that adds more value to a similar existing feature on a smartphone, for example. For many consumers then, even some that have never even heard of a MiFi, using a smartphone as a mobile hotspot is the more likely future; the window of opportunity for the MiFi is slowly closing, because the function is being absorbed by the smartphone.

Based on the CES experience of not using my MiFi, I’m likely to close down the month-to-month account and simply rely on my phone and tablet to provide 3G data to other devices. But we all have different needs, so I’m curious if you’re in the same boat or you plan to get or keep using a MiFi device. Have it in our poll!

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Mobile hotspots were initially confined to standalone devices like the MiFi and the Sprint Overdrive, which were designed to share 3G (HSPA, EVDO) and 4G (WiMAX) connections respectively. Carriers realized that a barrier to consumer adoption of hotspot technology, and the fees they enabled, were the cost and inconvenience of carrying a separate device for the capability. Smartphones began appearing with mobile hotspot integration, and adoption ratcheted up quickly.

Carriers charge up to $30 per month for smartphone mobile hotspot service, and up to $60 per month for standalone devices. This fee is on top of all other carrier fees associated with the devices, and is a windfall for carriers. As faster networks roll out this year and next, mobile hotspot service could be fast enough to start infringing on home connection options. This could see revenue skyrocket, as customers realize they can take their fast broadband with them everywhere.

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