FreedomPop "Free" Mobile Phone Service Relies on Freemium Revenue Model

FreedomPop now has added a "no incremental cost" mobile phone service to the Internet access plans it originally launched. The base service includes 500MB of data, 500 text messages, and 200 voice minutes, for no cost, after purchase of a compliant HTC Evo smart phone. 

FreedomPop plans to add other devices, eventually. 

There are, of course, some novel elements here, beyond the Freemium revenue model. FreedomPop says 45 percent of subscribers regularly pay for an additional feature or service plan, and the company is hoping to see that figure inch closer to 55 percent for its phone service.

The service also relies exclusively on use of the Sprint WiMAX data network. FreedomPop does not buy any wholesale "voice network" service, and therefore is a "data only" approach to mobile communications. 

That raises the issue of whether other service providers (especially those with an over the top approach) might try to do so as well. 

Of course, at some point all the leading U.S. mobile service providers will provide voice, messaging and data services using only the Long Term Evolution network, rather than using a hybrid approach, where voice is provided by a 3G network and all IP services use the data connection. 

But the "data channel only" approach is one reason FreedomPop is able to give away a base service, while building its revenue model on selling incremental services to users of its free basic service. 

For Sprint, the use of WiMAX to support mobile virtual network operator partners allows Sprint to make better use of a legacy network that does not represent the future of the business. 

The new FreedomPop offer represents the first direct challenge to mobile service provider retail packaging. But the FreedomPop initiative also represents a test of whether a small upstart can successfully achieve a major market disruption. 

Some might argue that disruption of the mobile business, so far, has required the intervention of a large, well-heeled ecosystem player, such as Apple. In the fixed network business, some would argue it has taken the entry of Google Fiber to challenge the fixed network high speed access value and price packaging.

So some will be watching to see whether FreedomPop can make significant inroads without an eventual entry by some other contestant with huge scale and deep pockets.