'Pop Goes the iPod
Could FreedomPop allow users to "cut the carrier 100 percent" with its upcoming close-to-free wireless data service?
As Light Reading Mobile reported it would in June, FreedomPop has developed a $99 "wireless sleeve" for the iPod Touch that allows users to access its service.
Here's how it works: the radio sleeve slips over a user's iPod Touch or iPhone 4, links to the phone via Wi-Fi and connects to Clearwire LLC (Nasdaq: CLWR)'s network via a WiMax radio in the casing. The sleeve will allow the video-capable MP3 player to surf the Web, video chat and more, for free -- or close to it -- on an unsubsidized data device that isn't linked to any carriers.
The startup will give at least 500MB of free data to each user monthly, then charge $10 per gigabyte once a subscriber hits the cap.
Users will be able add 10MB to their data bucket with each friend they get to join the FreedomPop network with a limit of up to 1GB. In addition, FreedomPop will allow heavier data users to earn up to 5GB free by engaging in partner offers and promotions, but the startup hasn't yet revealed details about those deals.
"You'll also be able to share unused capacity with your [FreedomPop] friend network," FreedomPop COO Steven Sesar reveals.
"We're literally cutting the carrier 100 percent," claims Sesar. "This is a Web company disrupting the telco space."
In Sesar's take, cutting the carrier means reducing the cost of acquiring the wireless data device to as low as possible, offering an initially free service and not locking the user into any kind of contract. One of most comparable currently available offerings is the Virgin Mobile USA Inc. (NYSE: VM) $65 personal Wi-Fi hot spot, which runs on the Sprint Corp. (NYSE: S) 3G network.
FreedomPop paid attention to "thousands of emails" requesting that the company make a sleeve for the iPod as well an iPhone. As Sesar points out, plenty of people already have an iPod Touch or can pick one up off eBay for a relatively small outlay.
"Obviously we're not going after the professional market," Sesar states. Instead he sees the target demographic as social networking-savvy 13- to 21-year-olds who want to get online for a low initial outlay.
The company will be building in social networking tools like chat and -- like Zynga Inc. and others -- will allow users to buy into offer ads that will give them more capacity on the network.
Sesar says that the company is eventually shooting to become a "free social wireless broadband" service. He says that it is also possible that the firm will add premium applications like VoIP, although Sesar says that his firm supports Google Chat and Skype already.
Of course, cutting out the carrier is unlikely to appeal to all wireless providers. But FreedomPop will start to offer service in 71 cities in the U.S. on Clearwire LLC (Nasdaq: CLWR)'s WiMax network and then move toward deploying on Sprint Corp. (NYSE: S)'s LTE network.
So what's in it for Clearwire and Sprint? Expanding market share and possibly lowering wholesale customer acquisition costs, Sesar says.
"The only way they’re going to take market share [from AT&T and Verizon, that is] is by allowing innovative companies like FreedomPop to innovate on their network," Sesar claims.
Sesar says that the friends-recommending-friends, social networking approach of adding customers to its network, could help FreedomPop lower customer acquisition costs. He says that it can cost a carrier hundreds even to get a a personal Wi-Fi hot spot user on the network. The eventual goal for FreedomPop is to take customer acquisition costs lower than $5.
Now, the company is actually getting ready to launch the service this year. "We're about two months away from launching," Sesar says.
FreedomPop is a startup created by Skype Ltd. co-founder Niklas Zennstrom and is backed by his Atomico Ventures VC company. Xconomy says that FreedomPop raised a $7.5 million Series A round in July from Mangrove Capital Partners and DCM - Doll Capital Management .
"We're well capitalized," notes Sesar, adding that what has been made public is not the full amount yet.
- FreedomPop to Phase Out Clearwire for Sprint LTE
- FreedomPop Might Offer Cheap 4G for iPod
- Meet the New US Wireless Operators
- FreedomPop Bets on 4G With Clearwire
— Dan Jones, Site Editor, Light Reading Mobile