FreedomPop, the startup that is trying to steal users away from mobile carriers by offering free, basic cellular voice and data plans, is adding another string to its bow today: the company is launching a low-cost WiFi service, where a user gets unlimited use of, and automatic sign-on to, 10 million hotspots across the U.S. for $5.
The service is potentially a shakeup for carriers that have been rolling out LTE services priced at a premium, and seems to fit usage patterns around already: FreedomPop cites figures that say 90% of data consumed by mobile users is over Wi-Fi.
Stephen Stokols, the CEO and co-founder, tells me that while the initial rollout will cover 10 million hotspots — “approximately 120 million people and between 65% and 90% of the top 100 metros”, which he says means “NFL, NBA, Pro sport cities” — the number will go up to 25 million by the end of Q1. The initial full coverage map is illustrated above.
The Wi-Fi service, which can work across a user’s multiple devices, will be available first through FreedomPop’s Android app with an iPhone app “in the works” and out in a couple of weeks. “It will take longer to get the auto-connect functionality on par with Google’s,” he says. And, summoning the spirit that makes FreedomPop potentially a threat to incumbents, he adds, “iOS is far more closed, whereas Google has committed to make Wi-Fi as seamless as possible, something else that should scare carriers.” No plans for a Windows Phone app, he added.
This will be the first time that FreedomPop has added a Wi-Fi plan to its service. “[We’ve] been waiting to get something compelling on a standalone basis and ensuring that the Wi-Fi experience works like cellular (auto-connect) vs rushing an experience that turns users off,” Stokols says. He adds that the carrier is “on pace to break 1 million users this year, adding in the hundreds of thousands per quarter.”
FreedomPop is not specifying who is providing its Wi-Fi because of restrictions in their contracts, but as a measure of where you will be able to access it, Stokols tells me that large retailer locations like McDonald’s, Starbucks, Burger King and Best Buy are all included. (Note: this seems to imply that there are at least two companies partnering with FreedomPop, since Google provides Wi-Fi to Starbucks, and Burger King and McDonald’s both appear to be AT&T shops.)
We have been told that Boingo is not among the partners, although if the number of hotspots is rising later this quarter, it could become one down the line.
Providers are worth wondering about for at least a couple of reasons. The first is that if it’s a carrier with which you already have a Wi-Fi hotspot plan, you may be less inclined to make the switch to FreedomPop. And the second is that some providers appear to be significantly faster than others, according to recent research from OpenSignal.
Up to now, FreedomPop’s business model has been based around offering a free, but pretty limited service (200 minutes of calls, 500 texts, 500MB data/month). To get voicemail, or to increase your allowances, you pay. Stokols says that he sees the Wi-Fi offering not as an extension of this model, but as a standalone service, another way of bringing on new customers who are either with other carriers or no carrier at all.
“This is [an] opportunity to deliver value regardless of what carrier the user is on,” he says. “For example, for $5 per month, you can cut your cellular data bill in half. You’d only need a 300 MB plan for that 5-15% of time when not on WiFi.”
The other target market? Those who have phones but no connectivity.
“We have had hundreds of thousands of ‘abandoned phones'” — (phones not attached to a cellular network) “that people try to bring to FreedomPop but because they are not on Sprint, we can’t activate cellular.” That’s because FreedomPop works by way of an MVNO deal with Sprint. “This gives us the opportunity to provide a cost-effective service to these budget users and give more value to an abandoned phone.” He estimates that there are 200 million abandoned phones in the U.S. today.
Nevertheless, while the company is projecting profit on the service, he admits that the margins will be thin.
LA-based FreedomPop has raised just over $19 million from investors that include Skype founder Niklas Zennstrom’s Atomico Ventures, DCM and Skype’s first investors Mangrove. The company is also working on extending its service to Europe, planned for this year.