FreedomPop Raises Another $5 Million To Help Launch Its Freemium Mobile Phone Service

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Freemium wireless internet provider (and soon to be wireless carrier) FreedomPop revealed that it has just locked up another $5 million in funding from existing investors DCM Capital and Mangrove Capital, and that its (so far undisclosed) valuation has more than doubled since it first raised its Series A last year. That new infusion of capital brings FreedomPop to a total of $16 million raised from investors.

So what exactly does FreedomPop plan to do with the extra funds? Well, CMO Tony Miller said one of its biggest goals right now is to build up inventory for its forthcoming mobile phone service launch — the inability to procure enough hardware ahead of time wound up hampering some of FreedomPop’s earliest device launches, and Miller said the company wouldn’t let that happen as it prepared to roll out its most ambitious program yet.

Here’s the whole thing in a nutshell: interested users can claim a monthly wireless plan consisting of 500MB of wireless data access, 200 voice minutes, and unlimited messaging for total recurring fee of zero. It’s hard to resist the temptation of the “free”. That’s not to say that the service as it stands is completely hassle-free — as Time’s Jared Newman points out, FreedomPop isn’t always totally transparent when it comes to pricing for certain features, especially during that initial setup process. That sort of pushy behavior, sketchy though it may be, is not a new phenomenon when it comes to freemium services and the model seems to be working for the company. Miller confirmed that FreedomPop’s revenues are beginning to ramp up, and that at this point device revenue and revenue from value-add features like data rollover and VPN have reached about a 50-50 split. If anything, the company’s only regret was that it couldn’t make this happen sooner.

“We wish could’ve launched [last year] with the phone play but it wasn’t a sure thing,” Miller conceded. To properly bulk up their hardware supplies for launch, FreedomPop is trying to get its hands on “tens of thousands” of devices, including old stalwarts like the original HTC Evo 4G and (slightly) newer models like the HTC Evo Design — the company is also exploring the prospect of offering more modern, LTE-capable smartphones, but don’t expect to see any of those until well after launch. And even then, that’s no guarantee that FreedomPop will have enough hardware for everyone who has expressed interest —over 100,000 users signed up for the beta service in the first 72 hours, a number that has only swelled since then.

While FreedomPop has struggled to make its mobile phone service a reality, more than a few other companies are trying to turn the wireless industry on its ear by redefining the very notion of a wireless plan. Andreessen Horowitz-backed ItsOn revealed its Zact mobile phone service earlier this year by rolling out a mobile phone service that lets users easily create and manage their own monthly phone plans, with the added bonus of automatic refunds if a user doesn’t actually use the amount of minutes, messages, or data they’re paying for. Ting, an upstart wireless service operated by Toronto-based Tucows runs with a similar model.

Even so, Miller doesn’t seem too concerned about the shifting competitive landscape. As far as FreedomPop is concerned, those other guys simply aren’t disruptive enough — when asked about that new crop of competition, Miller pointedly said they were “pretty niche plays at the end of the day.” FreedomPop’s goal is considerably loftier: rather than pitching the service strictly at cost-conscious niches like its rivals have, it aims to take on major nationwide carriers like AT&T, Sprint, and T-Mobile head on.

That honestly sounds a bit odd considering how reliant FreedomPop is on Sprint for bandwidth to resell, though that probably won’t be the case forever. The company seems appreciative of the Tracfone model, under which the company locks up wireless service and roaming agreements with multiple carriers, and Miller has confirmed that FreedomPop is in talks with two of the big four nationwide wireless carriers.

So all things considered, there’s plenty of wind in FreedomPop’s sails right now. Whether it’s ultimately able to crack the list of Big 4 wireless carriers is another question entirely, but considering all the shifts taking place in the wireless industry right now, FreedomPop has its work cut out for it.