There may have been a few hairs pulled in corporate boardrooms and many excited cheers coming from consumers in the US today. FreedomPop dropped some disruptive news as announcing a free mobile service covering the big three services: voice, text and data. This new offering includes 500 MBs of 4G data for free, unlimited messaging, and 200 free anytime voice minutes each month along with unlimited free calls to other FreedomPop users. FreedomPop will also sell an inexpensive unlimited calling plan ($10/month) as a part of the company’s freemium approach. They claim it’s the world’s first and while it’s not available yet, the expectation is for later this summer.
Why free? In this Forbes article, FreedomPop claims that “more than 45% of its customers now pay something, either via monthly plans (25% of customers) or added features (28%). These add-on services have 90% gross margins.” Wow! So the margin dollars aren’t huge, but they aim for millions of subscribers and making money on volume.
FreedomPoP was a data-only MVNO (using Sprint’s network); now they are all-IP services MVNO. Like Skype and other OTT providers that created massive price pressure and a demand for a richer communications experience, this new offer has potential to really shake up the US mobile wireless market and put further pressure on the voice business. This also seems different from other mobile VoIP OTT plays in that FreedomPop is designing around the user experience—it looks like it’s not a separate app or walled garden using user names; it’s the same phone experience of today.
This market shock approach from FreedomPop further agitates the dynamics in the changing mobile services market. This free service further underscores the need for traditional service providers to examine their voice business. The move into all-IP fixed and mobile networks isn’t just about a new, lower cost delivery mechanism compared to legacy networks. With the focus on increased data and broadband coverage, service providers must look at new cost models in order to make voice profitable in this competitive and changing market. This new FreedomPop service is targeted at a certain market segment and other providers can still play a role in their markets, but they need to rethink how they craft and deliver VoIP and IP communications.