A curious market experiment is taking place. I’ll explain. FreedomPop, an Mobile Virtual Network Operator (MVNO) founded in 2011 and based in Los Angeles, is offering 500MB of free wireless data over LTE for their customers. They are marketing a DSL type of replacement service with a LTE gateway and LTE mobile service through dongles, usb attachments for tablets and iPods. Their business model seems to be to over 4G LTE services as an MVNO by appealing to the lower end of the market with the offer of free data, low device costs, and opportunities to increase the amount of free data (beyond the initial 500MB) through mobile ads.
I think this is interesting from several angles.
Firstly, FreedomPop, at the moment is positioned as data only MVNO, unlike the multitudes of voice centric MVNO’s in the North American marketplace. This is interesting because they will either be complementing or competing with Clear on Sprint. If there is Clear then why FreedomPop…not ‘clear’ to me yet. The guys at prepaidreviews.com have a nifty chart that shows the present relationships in the NA MVNO space.
Yes, the second angle is target market. They are offering a DSL replacement service via their LTE gateway called the Freedom Hub Burst. This is a good idea generally speaking to serve the underserved, but this is exactly what Clear is doing. If the top end of the market, unlimited @ $49.99/mo is served by Clear, this is a complementary new bottom end offer to grow the total base.
They are selling a sleeve for an iPod to add connectivity, which is shown to the left and is called the Freedom Sleeve Rocket and a small form factor attachment to tablets to add mobile 4G to WiFi only tablets called Freedom Pop LTE Clip. To me this represents the underserved lower end of the market that could not afford to add mobile broadband to their device purchase initially and/or people purchasing these devices in a secondary/used market and now are attracted to mobile internet.
Third interesting angle is they are apparently planning to offer an open WiFi hotspot service and/or device. Tell me that an open WiFi hotspot won’t drive service demand. At an extra $10 per GB, this could get costly for the poor fellow that gets one. On the other hand, I wonder how they will deal with guys who think like I do. I would get this hotspot, and free 500MB of monthly data and use it for connected embedded devices like refrigerators, picture frames, alarm systems etc. It may be locked down where you cannot turn on WPA type of security and that would discourage people like me from using it that way. Either way, driving demand is a good thing from their standpoint.
Last angle to discuss is the service subsidy. They are planning to offer opportunities for their subscribers to get more free data through mobile advertising participation, referral to friends, joint offers with partners like Netflix and so on. I think this is probably a the most facinating angle of all to me. Mea culpa, I have long advocated this, so yeah, I’m interested in the outcome, however this has not been systematically tried like this before in the mobile broadband arena. Seems to me, if they can find compelling opportunities this alone may help build the base. Maybe the free WiFi hotspot could add some free data to your monthly quota by just using the FreedomPop hotspot name as advertising to build interest. I may be compelled to put it in my car for my kids if that were true. There are so many ways this could get really interesting. Again, I think this could be the secret sauce in the end.
It’s also worth noting, the lack of a voice offering makes me wonder if they are waiting to offer VoLTE type of devices for your vocal pleasure? There has been no public mention of this but I can’t help but think that since they are focusing on LTE and not WiMAX as their platform, and they are looking to head down the path of enabling connectivity over LTE, then this must be a future possibility for them.
So at the end of the day, FreedomPop is a very interesting experiment being tried out by DCM, Mangrove Capital Partners and Atomico/Niklas Zennstrom to build a business as a $10/mo no contract 4G LTE MVNO. There’s nothing clearly wrong with their approach nor overly innovative or different, but maybe the interesting mix of target markets, devices and market savvy like offering free 500MB of mobile broadband will be compelling to the market. Who knows, with popularity maybe the whole marketplace will need to react, and that could be a good thing…