FreedomPop isn’t the only virtual carrier tinkering with the idea of letting friends share and swap mobile megabytes. NetZero(s UNTD) is launching an interesting data share program that awards each of its customers 1 GB of free data each month. The catch is you can’t uses that data yourself; you have to give it away to your friends.
NetZero became a mobile virtual network operator (MVNO) in March, buying time on Clearwire’s(s clwr) WiMAX. It even stuck with to its free-access dial-up roots by offering a gratis 200 MB for one year to any customer who buys a 4G hotspot or dongle. Its paid plans, however, look much more like the traditional mobile broadband offerings: starting at $10 for 500 MB and scaling up to $50 for 4 GB.
The new gifting features, however, throw that traditional model for a curve. Every customer – even the ones of free plans – will get the 1 GB data allotment, which they can award in 200 MB increments to any other NetZero customer with a Facebook(s fb) account. Though a customer can’t “gift” himself any of that data, his or her friends certainly can. Each customer can receive up to five 200 MB awards a month from Facebook friends for a total of 1 GB. That means for a monthly subscription of fee of exactly zero dollars, a NetZero customer could rack up as much as 1.2 GB of data to use each month.
The MVNO space has become a fascinating laboratory of new mobile voice and data business models. The recently launched FreedomPop and Solavei have been exploring the concept of using social networks to create stickiness with their brands, to virally market their services and as a platform on which to build other IP services. Karma, another Clearwire MVNO that has yet to launch, is pioneering the concept of “social bandwidth,” which encourages customers to share their connections with strangers in exchange for data bonuses.
NetZero is taking pieces of each of those strategy, though its implementation is all its own. Instead of building its own social network, it’s relying on Facebook to provide that friendship glue. The promise of free data not only keeps its customers engaged with the service – with no contracts they can leave at any time – but encourages communities of friends to engage with NetZero and recruit new members since those friends are ultimately the source of monthly data bonuses.
The question is whether giving away that much free data is a sustainable business model, especially if many of NetZero’s customers aren’t bringing in any revenue. NetZero has also the cut the price of its modems in half since its March launch. You could look at that as a temporary incentive coinciding with the launch of its new sharing program. Or it could be a sign it hasn’t had much luck in bringing customers on board. Slashing hardware costs and giving away gobs of free data is one way to attract customers, but I doubt it’s a strategy NetZero can keep up indefinitely.