As reported in the Telegraph Newspaper, FreedomPop is crossing the Atlantic and moving into new territory with the hopes of expansion and offering budget-conscious customers a chance to save on their cell phone bills. Currently, a company stationed in the US, this company offers free 4G services and will be in direct competition with Talk-Talk and Tesco Mobile in Europe.
The first initial phase has been set into place and this venture capital-backed plan looks to be a profitable one. The European people need a company that can offer those greater savings and better service, all key factors in FreedomPop’s pitch. There will be a small set up fee of £7 for all new accounts, but the free basic service will provide each caller with 200 voice minutes, 200 texts and the ability to use the internet for up to 200 MB of data. To put it in layman’s terms, that would allow each person the ability to visit about 100 web pages per month.
Many people wonder how the company will make money if they give their services away for free. The profitable side of their business is once subscribers use up all their free minutes, they can purchase a package that runs anywhere from £4.99 to £16.99 per month to get the additional minutes that they need. There will also be a chance for subscribers to receive a free allowance by using third-party marketing surveys to increase their minutes.
The company operates on what is called an MVNO, or a Mobile Virtual Network Operator. This is similar to the structure of Talk-Talk and Tesco. They are simply looking for a very specific price sensitive market and utilizing the services of the Three Network will allow them to give services away dirt cheap to their subscribers. In the US, they piggy-back onto Sprint’s Network.
FreedomPop was the brainchild of Stephen Stokols, and their current customers in the US only seem to use their free minutes with only about half buying extra packages. However, the company still remains profitable because they only need to have about 50,000 subscribers in the UK to be in a positive cash flow situation.