FreedomPop — the U.S. startup that has built a mobile operation based around free basic voice and data services — today announced its newest international market, along with a strategic partnership to help tackle it. The company is going to launch services in Mexico, and it is doing so in a strategic partnership with Dish Mexico, a satellite-based pay-TV and internet provider that is jointly owned by Dish and MVS Comunicaciones. Beta sign ups start today and services will go live in three to four months, the company said.
As part of this, Dish “will inject an undisclosed amount of capital into the JV to ensure it has ample funding for success.” We have reached out to FreedomPop and its CEO and co-founder Steven Stokols to ask for more details and will update as and if we learn them. To date, FreedomPop has raised just under $110 million, with investors including Intel, Atomico, Mangrove and Partech Ventures.
For Dish, it’s a way to move into mobile without building a service on its own. “We chose FreedomPop as our strategic partner in Mexico because our main objective is to constantly deliver consumer value and we have seen the company do this in other countries so the model is proven,” said Ernesto Vargas-Guajardo, CEO and Director of MVS Comunicaciones, in a statement. “We’re excited to have the world’s most innovative and customer-centric mobile provider as a partner.”
In the meantime, here’s what we know: the deal is being described as a JV and will be a “blueprint” for further deals coming in Germany, Italy, Asia and Australia. In other words, it sounds like FreedomPop will be partnering with a number of other non-telco providers in the months ahead — and maybe picking up some more investment in the process.
Mexico has a population of 126 million, and FreedomPop is aiming to have some 1 million users in its first phase there (“early years” is the time period given in an article in Mexican financial paper El Economista).
Up to now, FreedomPop has built its business by working with the very carriers that they are disrupting. Mobile operations like Sprint in the U.S. and EE in the UK lease capacity to FreedomPop for its services. It seems like with this deal, the startup is expanding to work with other kinds of providers to provide the bandwidth for its services.
Here it looks like there will be two parts to FreedomPop’s entry into Mexico: it will work with Dish to market the service and potentially sell it in bundles with TV; and and it will use network from America Movil, the dominant carrier that owns Telcel, which will lease out network as part of a move to bring more competition to the market, a move recently mandated by regulators.
As we have described before, FreedomPop doesn’t consider itself a typical MVNO simply reselling capacity in a low-margin, high volume play. It gives away basic bundles of data, voice and text and then upsells on extra data, voice minutes, voicemail and other services. On top of this, it buys only data which it then uses to offer the rest of its services — for example, voice as VoIP. And, instead of prebuying in bulk, it negotiates different usage tiers and pays only for what its customers use. More recently it has been working on ways of using this technology directly within carriers’ networks to build new services for them, giving FreedomPop a more diverse revenue base in the process.
To date, FreedomPop says that it has reached 1 million subscribers in the U.S., UK and Spain and has given away some 10 billion megabytes of free data in the last year. It also said that 52 percent of users “don’t pay FreedomPop a penny each month.”
Targeting emerging economies where you have a large population that is price sensitive to the costs of mobile services, in markets where there is relatively little competition at the moment — the biggest are Telcel, Movistar and AT&T currently — is a smart move from the company.
“We know everyone in the world would love free voice, data and text and with our partnership with Dish Mexico and the upcoming four other international joint ventures, we are exponentially increasing our progress in making free mobile services a reality for everyone,” said Stephen Stokols, CEO and co-founder, FreedomPop.