FreedomPop, a United States bases cellular service provider recently began offering their services in the United Kingdom gaining about a quarter million new subscribers. The company offers a plan that gives its customers 200 voice minutes, 200 texts and 200MB of data all for free. The company is just short of being three years old and is close to signing its one millionth customer.
To be able to offer its services for free, FreedomPop relies on some customers upgrading and purchasing additional services. According to the company, the average user purchases one to two additional services every month including unlimited calling, or data, device insurance, international calling plans and anonymous privacy features. While some handsets are compatible with the new FreedomPop SIM cards, device sales are also a source for revenue.
One way FreedomPop on fortune can offer the free service plan is that unlike traditional cellular providers, FreedomPop is a mobile virtual network operator or MVNO. Instead of having to invest billions in towers, switching equipment, and other back-office gear, FreedomPop buys capacity from other carriers like Clearwire and Sprint at wholesale prices. Without the operating cost of owning and maintaining the infrastructure, FreedomPop is able to mark up the wholesale rates slightly to cover its overhead, which in turn it keeps to a minimum. An example is marketing cost which is practically nothing compared to other carriers since FreedomPop relies on word of mouth advertising for its growth.
The idea of MVNO’s is shaking up the established market for cellular services. It has also allowed FreedomPop to attract a number of investors strengthening the company’s financial position. Recently, another round of funding has provided the company with $59 million since its inception.
The quality of phone calls over the network is consistently very good. Data uses the 4G network providing high speeds for watching video, querying the internet, or streaming music. The 200MB a month translates into about 500 web page views or five typical YouTube videos.
To enhance the service, customers can earn free extra data by completing surveys and downloading coupons from affiliated marketers. After installing the FreedomPop app, customers can easily see the number of minutes, texts or data that is left during the billing cycle.