FreedomPop has made waves in its attempt to steal loyal customers from major service providers by promising free basic call and data plans for mobile users. A lofty goal, it would seem, but with 10 million Wi-Fi hotspots at their disposal for only $5 per user, traditional carriers potentially have something to worry about.
While many are accustomed to purchasing data plans on a monthly basis, that is to use 3G, 4G, and even in some locations, Edge networks provided by their carrier, FreedomPop claims that most of a person’s data is used through Wi-Fi hotspots, only taking advantage of their data plan networks only 10% of the time. This suggests that most of the data users purchase goes unused, which may make many question the justification for purchasing a data plan from their service provider.
In an interview with TechCrunch, Stephen Stokols, co-founder and CEO of FreedomPop, boasted coverage for approximately 120 million Americans following the initial rollout of their network, and another 25 million at the end of the first quarter. This coverage will be made possible, or at the very least easier, thanks to the $30 million received in funding for this start up.
And it should surprise no one that they’ve been able to amass this kind of funding. Sokol claims that the company has received interest from large tech companies who wanted to purchase the startup before it even premiered. FreedomPop, however, has its sights aimed higher than simply being a carrier. The company also has hardware such as smartphones and dongles to help take advantage of its Wi-Fi centric approach to connectivity.
Sokol hopes to reach at least a million users across the US by the end of its first year, hoping this will draw in more investors who see it as a profitable venture. It would be the company’s second proving ground; in May of this year, FreedomPop premiered its services in the UK. In this market, users were allowed to use pre-owned mobile devices and purchase the service through service providers Three and Jetsetter. Sokol hopes to draw in another carrier in the region soon.
The option to use the UK first was a strategic one. While similar services exist, using data to perform voice calls and reducing the cost of data packages from providers, they generally subsist by purchasing minutes and packages from the competition, allowing them to be attractive to consumers but not too thrilling to investors. FreedomPop differs in that it mediates with the competition to pay only for data used rather than bulk purchasing, increasing profit margins, making more investors interested and eventually growing the span of their coverage. And it has drawn the right attention as there are already imitators trying to copy their business model, such as Sprint’s RingPlus.
One area of concern, however, is customer relations and service. There is no physical presence to speak of, no headquarters or brick-and-mortar outlets. Sokol has noted the concern but was quick to point out that the price margin–1/100th–of the competition is too enticing for customers to simply ignore, giving them the time and funding to address customer concerns at a pace that the competition might not be able to keep up with. He also pointed out that their operation, like nearly all major businesses in the world, now take place online, meaning this is less of an issue for a startup and more of a concern for decades-old businesses that have had to transition to the digital age.
But more important than addressing customer concerns, Sokol said, was to be ahead of them, to provide service and coverage that answers customers’ questions and woes before they are even expressed, that excellent service is its own customer care.