FreedomPop Sparks Mobile Internet Free-for-All
Clearwire LLC (Nasdaq: CLWR) wholesale partner FreedomPop opened the doors to its public beta Monday morning, hoping to steal away "tens of thousands of customers" from incumbent U.S. carriers AT&T Inc. (NYSE: T) and Verizon Wireless .
The mobile virtual network operator (MVNO) plans to achieve its lofty goal by making mobile data a commodity, according to COO Steven Sesar. FreedomPop offers consumers a guaranteed minimum of 500 megabytes of free data per month on Clearwire's WiMax network, with the opportunity to earn more through promotions and by recruiting friends to the service.
FreedomPop will cap the number of beta participants, but Sesar tells Light Reading Mobile that he expects more than 100,000 to sign up. The service is initially available on two re-branded Clearwire devices -- a hot spot and data dongle -- that are free with a refundable deposit. The FreedomPop device that's gotten the most attention, a sleeve that turns an iPhone or iPod Touch into a data device, will launch in four to six weeks.
Why this matters
FreedomPop's value proposition is an attractive one, and it comes at a time when mobile service plans have never been more expensive. But, the service isn't without its limitations. With data-only service, consumers will have to rely on voice-over IP and over-the-top apps for voice and messaging. For FreedomPop, making money on the service will be a challenge if it's to rely on a business model that offers free data for everyone.
Right now, its biggest limitation is its network provider, Clearwire. The wholesaler's WiMax network covers only 130 million Americans out of the gate. FreedomPop does, however, have a deal in place with Sprint Corp. (NYSE: S) to use its Long Term Evolution (LTE) network next year, at which time it will reach more than 100 million more Americans.
The MVNO is one of several that Sprint is bringing online as it gets its own service up and running on LTE. Sesar says that the carrier was nimble and accommodating in the launch process, as both companies share a common goal of luring customers away from the big two.
"There's a mutual understanding that we can take market share away from the big incumbent two," Sesar says, adding that Sprint's not worried that FreedomPop's service could cannibalize its own, given its small market share relative to AT&T and Verizon.
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— Sarah Reedy, Senior Reporter, Light Reading Mobile