New mobile ISP FreedomPop plans to take the “freemium” business model popular for Web services and apply it to mobile broadband access, giving away access to Clearwire’s WiMAX and future LTE networks to most customers at no charge. If FreedomPop can make the math work, it could potentially shake up the U.S. wireless market, extending mobile data services to broad swathes of the population.
FreedomPop has been rather hush-hush since it revealed its plans in December. At the time, it announced it would purchase wholesale capacity from ailing LightSquared, raising questions as to whether the new service would get off the ground. On Tuesday the Federal Communications Commission said it planned to yank LightSquared’s LTE network waiver, effectively killing its plans to launch a wholesale nationwide mobile broadband network. One day later, FreedomPop had a new wholesale partner and said it would reveal more of its launch plans in a press conference this afternoon.
“FreedomPop’s ultimate goal of providing our customers with a free mobile broadband alternative will soon be realized thanks to Clearwire’s proven 4G network services,” Tony Miller, FreedomPop VP of Marketing, said in a statement. “This agreement enables FreedomPop to offer a disruptive retail service, providing free, flexible, high-speed internet access to millions of Americans.”
Last week Forbes got hold of Miller and wrote up many of the details of the company’s unique business model. In short, FreedomPop plans to offer a “free” basic service to most of its customers but charge fees to premium users, which Miller expected would account for 10 percent to 15 percent of the ISP’s subscriber base. FreedomPop won’t sell devices, but rather loan them to customers for free as long as they put down a deposit. Instead of smartphones and tablets, FreedomPop will distribute only modems, such as USB sticks and mobile hotspots, which customers can use to connect their laptops, tablets or any other device.
When Miller spoke to Forbes he didn’t reveal any details about how FreedomPop would price its premium plans or how exactly it would monetize all of the free broadband access it planned to give away, though he added that the virtual ISP planned to make use of mobile advertising to supplement its revenues.
If FreedomPop’s plans sound like innumerable Internet services business models out there, it’s no coincidence. One of the company’s biggest backers is Niklas Zennstrom, co-founder of both Skype and Kazaa. Companies ranging from Skype to Dropbox to Evernote have put freemium at the core of their services, offering the platform and most basic functions for free, while reserving key features for its paying customers.
How FreedomPop will transfer that freemium model to a wireless ISP is puzzling. It could implement strict data caps on its free subscribers or throttle back speeds to limit use of high-bandwidth applications like video – or a combination of both.