Without getting specific, Miller adds that users will be able to earn more data usage through some social features built into the service, and share some of their allotted data with other users.
Miller says FreedomPop will offer three mobile broadband devices at first. There will be a USB dongle for laptops, a Wi-Fi hotspot device that can connect up to 20 devices to the Web, and an iPhone case that will allow the smart phone to circumvent the user’s wireless carrier and can also charge the phone and act as a hotspot for up to eight additional devices.
Users won’t pay for the devices, but they will have to fork over a refundable deposit fee. Miller says this is meant to discourage abuse, such as people reselling a hotspot or iPhone case on eBay. While the devices will be sold primarily online, Miller says, they may be available at some brick-and-mortar stores as well.
FreedomPop will also sell prepaid wireless data plans that Miller says will be priced “significantly lower” than existing prepaid and contract plans on the market. Prices vary, but AT&T charges $50 per month for a two-year contract that gives users five gigabytes of data for use with a USB modem or mobile hotspot, while smart phone plans include a three-gigabyte option that costs $30 per month. On the prepaid side, the company’s GoPhone service offers 500 megabytes of phone data for $25.
Miller says FreedomPop expects most of its revenue will actually come from services it will offer on top of the Internet access. He won’t say what these will be, exactly, but says that a security offering such as virtual private networking won’t be one of them—it didn’t do well in an early test. He says the company is also looking into some sort of advertising opportunities, which could be another revenue source.
Brian Rich, a partner at venture capital firm Catalyst Investors, which has invested in Clearwire, says FreedomPop is a clever idea, as it’s taking advantage of the capacity offered by Clearwire’s network, which is less constrained that the networks of AT&T and Verizon Wireless. He wonders if FreedomPop will be able to make enough money off reselling Clearwire’s service to make its efforts worthwhile.
Neil Shah, an analyst with Strategy Analytics, feels similarly, saying FreedomPop will also need to forge deals with other mobile broadband partners because Clearwire’s range is still limited. The service currently reaches more than 130 million people in over 70 U.S. cities. FreedomPop also has a deal with LightSquared, which has been planning a nationwide wholesale LTE network, but the U.S. Federal Communications Commission recently revoked LightSquared’s permit. Miller says FreedomPop is working on another U.S.-based deal, though.
Shah also cautions that as people get more used to using data on their cell phones, FreedomPop will have to give away even more to lure users to its service. “Eventually, one gigabyte won’t be enough,” he says.