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FreedomPop

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FreedomPop is an Internet service provider based in the United States providing paid and freemium service, founded in 2011. It was initially backed by Skype co-founder Niklas Zennstrom and his venture capital firm Atomico,[1] and received $7.5 million in its first round of funding in 2012 from venture capital funds Mangrove Capital Partners and Doll Capital Management.[2][3] FreedomPop has partnered with Clearwire and Sprint to provide free wireless data to users as well as text, plus to be able to provide voice and SMS text services.[4][5]

In the early part of 2013, the company raised $4.3 million in new Series A1 financing from existing investors DCM and Mangrove Capital, bringing total funding to $11.2 million.[6] The company signed up over 100,000 customers in their first year of operation.[7][8]

FreedomPop sells several mobile broadband devices for use with their service, including a 4G-only iPhone "Sleeve Rocket",[9] the 4G-only Spot Photon, a 4G-only USB dongle called "Bolt",Sierra Wireless 3G/4G Overdrive Pro, A "SpotMiFi" 4G LTE hotspot, and a home broadband gateway called a "Hub Burst". In June 2013, FreedomPop announced that on strong margins in the data-only business, it would start offering full-service mobile phone with free voice, data, and text in late 2013.[10]

Overview

In November 2012, FreedomPop began providing free and paid mobile wireless Internet services in the United States through wholesale Internet carrier Clearwire. The company later launched home broadband service, to compete on cost with home broadband. FreedomPop extended free wireless internet service nationwide to most Americans in April 2013 with its first 3G/4G hotspot, the Overdrive Pro.[11] FreedomPop ended the partnership with LightSquared as a result of Federal Communications Commission (FCC) regulatory issues, and instead decided to partner with Clearwire.[12] The company later also partnered with Sprint to provide nationwide 3G, 4G, and LTE coverage.[13]

FreedomPop's business plan is to provide a limited amount of data (500MB) to users for free, while offering higher capacity plans for a monthly fee. They also sell additional data on a pay-as-you-go basis at rates between $0.007 and $0.02 per megabyte depending on which plan the customer is on, and allow users to trade unused data capacity with each other via a tool on the company's website.[14] Additional revenue streams come from the sale of wireless accessories, per-minute and per-text overage charges on the voice service, and paid add-on services such as virus protection and usage alerts. Tony Miller, chief marketing officer, indicated in 2012 that the company believed 10-15% of users would opt for premium plans,[15] but a subsequent report indicated the adoption rate for paid services is much higher, about 45%,[16] with the company claiming gross margins over 50% on premium services.[17] Miller also claimed in July, 2013 that FreedomPop's high-margin, recurring service revenues had achieved parity with its low-margin, one-time product revenues, which if true would suggest that the firm's business model has the potential to be sustainable.[18]

Services

FreedomPop is pursuing a freemium business model, where it provides a set amount of data to users for free, sells excess data at a nominal cost, and allows users to trade unused data capacities on a social network. Free Internet is FreedomPop's primary service though it has announced plans to offer a free mobile phone service in late 2013. After purchasing a FreedomPop device, FreedomPop users will receive 1 GB of data for free each month. Additional data will be available for $10–$20 per gigabyte.[14][19]

In addition to the free data that renews with each month, FreedomPop offers ways to earn free data through partner promotions, like signing up for trials of Netflix, or registering a domain at GoDaddy as well as through referrals to new users which can also earn up to 500MB each month, with each referral earning 50MB of data, up from the previous 10MB.[6] FreedomPop announced Social Sharing features: its user dashboard shows a list of friends, with a graphic showing how much free data each friend has left that month, with a “Give” or “Get” button next to each name. Users can help others who are running out, or request data from those who haven’t used much.[6] In April 2013 FreedomPop announced its first 3G and 4G nationwide hotspots on Sprint's nationwide network[13], and that June, they launched free phone service to be used on refurbished Android phones[20]. These phones come with 500 MB of free data, and more data can be purchased once that data runs out. FreedomPop began taking orders for these phones on October 1, 2013 [21] In August 2013, the company expanded their service with the addition of LTE nationwide hotspots, but most customers have hesitated to buy 4G LTE hotspots, because of Sprint's very limited coverage of 4G LTE.[22]

Criticism

In a review of FreedomPop's core service, Time reporter Jared Newman reported that some service fees were not clearly noted on the homepage, noting that plans were advertised as “100% FREE” which were only free for the first month of service. However, FreedomPop does offers customers a 500MB free plan every month. Newman also reported about FreedomPop's active status fee, a $.99 charge for non-use of FreedomPop's free service, though he also noted that FreedomPop's fee structure is no different then the major carriers.[23] FreedomPop claimed to suspend the active status fee on June 13, 2013,[24] despite the fact that as of December 10, 2013 the active status fee provision remains in their service plan terms.[25]

FreedomPop originally partnered with LightSquared, purchasing wholesale Internet services from them.[26] This decision was met with some controversy.[27] Commentators cited the ongoing FCC investigation as to whether or not LightSquared interferes with GPS frequencies. In early 2012, FreedomPop ended their partnership with LightSquared.Cite error: The <ref> tag has too many names (see the help page).

References

  1. ^ Kharif, Olga (December 16, 2011). "Zennstrom Said to Plan Skype-Like Wireless With FreedomPop". Bloomberg Businessweek. Retrieved December 16, 2011.
  2. ^ "Doll Capital Management". BuzzSparks. Retrieved August 6, 2013.
  3. ^ Hardawar, Devindra (July 10, 2012). "FreedomPop Raises $7.5M to Free You from Your Carrier Shackles". Venture Beat. Retrieved August 10, 2012.
  4. ^ Velazco, Chris (July 10, 2012). "FreedomPop Teams With Sprint To Broaden Reach Of Its Freemium Internet Service". TechCrunch. Retrieved August 10, 2012.
  5. ^ Velazco, Chris (January 8, 2013). "FreedomPop, textPlus team up to offer freemium voice, SMS service". Gigaom. Retrieved February 26, 2013.
  6. ^ a b c Geron, Tomio (February 7, 2013). "FreedomPop Adds Social Sharing, And $4.3 Million". FOrbes. Retrieved February 26, 2013.
  7. ^ Goldstein, Phil (August 6, 2013). "FreedomPop crosses 100K subs, adds support for Sprint's LTE network". FierceWireless. Retrieved September 7, 2013.
  8. ^ Fitchard, Kevin (August 6, 2013). "FreedomPop racks up 100K users, adds Sprint LTE to its mobile data arsenal". GigaOm. Retrieved December 18, 2013.
  9. ^ Fried, Ina (March 10, 2012). "Backed by Skype Co-Founder Zennstrom, FreedomPop Starts Taking Sign-Ups for 4G iPhone Sled". AllThingsD. Retrieved May 16, 2012.
  10. ^ Kersey, Ben (June 5, 2013). "How FreedomPop Will Offer Free Phone Service". Forbes. Retrieved June 26, 2013.
  11. ^ Colon, Alex. "Freedom Spot Overdrive Pro (FreedomPop) Review & Rating". PCMag.com. Retrieved September 7, 2013.
  12. ^ Parkhurst, Emily (March 27, 2012). "FreedomPop partners with Clearwire to offer free mobile data access". Forbes. Retrieved May 16, 2012.
  13. ^ a b "FreedomPop brings its free internet service to Sprint's 3G network, launches new hotspot". VentureBeat. Retrieved September 7, 2013.
  14. ^ a b Fitchard, Kevin (March 30, 2012). "FreedomPop's Plan to Become the Anti-Carrier". Bloomberg Businessweek. Retrieved May 16, 2012.
  15. ^ Woyke, Elizabeth (February 9, 2012). "FreedomPop Replacing LightSquared With Other Carrier As 'Free Broadband' Launch Partner". Forbes. Retrieved May 16, 2012.
  16. ^ Van Camp, Jeffrey (October 1, 2013). "FreedomPop launches free smartphone talk and data service (and a $100 HTC Evo)". Digital Trends. Retrieved November 23, 2013.
  17. ^ "FreedomPop Announces The First 100 Percent Free Mobile Service Free Voice, Free Text, Free Data". PRNewswire. June 5, 2013. Retrieved November 23, 2013.
  18. ^ Velazco, Chris (July 11, 2013). "FreedomPop Raises Another $5 Million To Help Launch Its Freemium Mobile Phone Service". TechCrunch. Retrieved November 23, 2013.
  19. ^ Broida, Rick (July 31, 2012). "FreedomPop cradle brings free 4G to iPod Touch". Retrieved August 10, 2012.
  20. ^ Geron, Tomio (June 5, 2013). "Data For Nothing, Calls For Free: How FreedomPop Will Offer Free Phone Service". Forbes. Retrieved December 18, 2013.
  21. ^ Velazco, Chris (October 1, 2013). "FreedomPop Takes Aim At Carriers With Its New, Free Phone Plan". TechCrunch. Retrieved December 18, 2013.
  22. ^ Fingas, Jon (August 6, 2013). "FreedomPop jumps to LTE, lets you run out of free data faster than ever". Engadget.com. Retrieved September 7, 2013.
  23. ^ Newman, Jared (June 5, 2013). "FreedomPop's Free Wireless Would Be Cool If It Wasn't So Shady | TIME.com". Techland.time.com. Retrieved November 6, 2013.
  24. ^ "We're Listening". FreedomPop Blog. June 13, 2013. Retrieved December 2, 2013.
  25. ^ "Service Plan, Equipment and Payment Terms". FreedomPop. November 1, 2013. Retrieved December 10, 2013.
  26. ^ Melanson, Donald (December 10, 2011). "Skype co-founder's latest company signs deal with LightSquared, promises free broadband and voice services". Engadget.com. Retrieved September 7, 2013.
  27. ^ Segan, Sascha (December 11, 2011). "LightSquared's GPS Mess Chains FreedomPOP's Free Broadband". PC Magazine. Retrieved December 16, 2011.
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