FreedomPop Explains How It Will Offer Free National Broadband Starting This Summer
Many startups are secretive but few are as mysterious as FreedomPop. In December, after announcing itself, its ambitious plan to offer free broadband to all Americans and its ties to Skype and Kazaa co-founder Niklas Zennstrom, the Los Angeles-based company essentially disappeared. FreedomPop’s only web presence, a site so hastily thrown together it seems like a joke, yields no information about the startup’s executives, the planned service or when and where it will launch.
FreedomPop is divulging some details about its plan to offer free/low cost broadband nationally. The information removes some of the mystery of the startup's strange website.
It turns out the startup is willing to talk. An interview with Tony Miller, FreedomPop’s head of marketing and communications, yielded quite a bit of information about the startup’s plans, including the devices it will sell, the markets it is pursuing and just how free its mobile broadband will be.
FreedomPop’s aim is to launch service this summer, around June at the earliest. Miller said service will be available nationwide, or close to it, at launch. Since its original network launch partner, LightSquared, is mired in regulatory delays, FreedomPop has been talking to other wholesalers and wireless carriers about renting network capacity. FreedomPop will announce a new partner in coming weeks, said Miller.
For FreedomPop, “free” means “free for most people.” As Bloomberg BusinessWeek reported in December, the startup expects paying customers to subsidize the majority of FreedomPop users, who will be able to utilize the service’s broadband on their phones, tablets and laptops for free. (Advertising will be a part of FreedomPop’s service but Miller said ads won’t generate most of the company’s revenue.)
FreedomPop believes 10 to 15% of its users will opt for paid premium plans. Miller likened the model to Dropbox, the popular online file-storing service that provides a free, basic service and charges nominal amounts for more storage.
FreedomPop is also defining “Free” as “free after an equipment deposit”. To connect to its 4G network, FreedomPop will sell three devices: a plug-in “dongle” for laptops, a MiFi-like mobile hotspot for connecting multiple devices and a third, mystery gadget that Miller would only describe as “innovative”.
All three devices will require a deposit, similar to the way Internet Service Providers charge for modems or cable companies charge for set-top boxes. FreedomPop originally considered charging $49 as a deposit but Miller said the company wants to lower the price to $29, possibly through subsidies.
The policy is likely to be unpopular regardless of price but Miller contends that some type of deposit is necessary to counteract abuses like unauthorized re-selling of equipment.
FreedomPop believes consumers and small businesses will be most attracted to the service. The company had not intended to market to small businesses but Miller said FreedomPop altered its plans after small businesses contacted the startup expressing interest.
FreedomPop has amended its target audience in other ways. In its first public communications, the startup said it would focus on “underserved markets” that lacked access to affordable broadband. Miller said that is still true but that the startup has added “low-end home users” and “high-end pro-sumers” to the mix.
“Low-end home users” refers to people who don’t consume much bandwidth and are currently paying $29 or $39 a month for a relatively slow Internet connection. “High-end pro-sumers” means people who have high-speed connections at home but travel a lot.
The idea is that this group would rather utilize FreedomPop than a paid Wi-Fi service like Boingo. The low-end home users will be more of a challenge to traditional carriers.
Many of the ideas come from Zennstrom, whom Miller called FreedomPop’s “main backer”. Zennstrom has “wanted to do this model for awhile — even before Skype,” said Miller. “It’s more than an investment for him.” Zennstrom has committed an undisclosed amount of money to FreedomPop via Atomico, his London-based venture capital firm. He also advises the startup.
Like Skype in its early days, FreedomPop will outsource functions and stay small to keep costs low. Miller described the ethos as a “telco [telecom company] with web principles.” At launch, customer service will be online-only though there are plans to institute limited call-center hours later on.
To further save money, FreedomPop is incorporating viral/social sharing into its service. One feature sounds similar to Dropbox’s policy of giving more storage space to users that refer others. “We will have incentives for users that have friends on FreedomPop,” said Miller. The feature is designed to decrease FreedomPop’s customer acquisition costs.
With a good portion of its plans revealed, FreedomPop seems less like an enigma or a hoax and more like a risky startup. Miller said the company had avoided disclosing details for competitive reasons since it has yet to introduce its service.