No one can deny that traditional cellular phone service can be pretty expensive. FreedomPop, the company that made the internet free, decided today that cellular service should be free as well.
Starting as early as this summer, FreedomPop wants to offer free cellular service plans that offer unlimited texts, 500 MB of 4G data and 200 minutes of voice service. Already offering customers 500MB of free data on their own devices that include a mobile hotspot and USB sticks, FreedomPop originally wanted to provide phone service first.
“This is actually what we wanted to do out of the gate,” said FreedomPop CEO Stephen Sokols. He is hoping the service should be ready at the end of summer with preorders to begin soon.
In order to actually make money, FreedomPop will be offering upgrades to their free plan that include a $9.99 unlimited calling and $17.99 for 2 GB of data. Their current data shows that 45 percent of customers pay more than the free service. Stokols said that these add-ons account for 90 percent in gross margins.
For the average mobile customers, these are significant savings over traditional cellular phone contracts that usually lock customers in for 2 years. It even has advantages over several prepaid phone options like Virgin Mobile or Boost Mobile, who offer no freemium start up plan.
On the handset side of the business, FreedomPop’s service is set to run on any Android Sprint phones, including the newest LTE devices. For those without current cellular devices, they already have a plan in place to sell discounted refurbished Android phones that include the Galaxy SII and the Evo 4G. All of these $200 or below.
The freemium model is a slippery slope when it comes to most markets but has worked for companies in the past. Transforming such a business model into the mobile space is a prospect that only time will be able to judge.