Service provider FreedomPop announced Wednesday it will offer a free voice plan for mobile users by the end of the summer. The new plan will include 200 voice minutes, unlimited texting, and 500MB of data.
FreedomPop has already raised a few eyebrows with its free mobile data plan.
FreedomPop—the idea of Skype founder Niklas Zennstrom—also will offer a $10-a-month plan for unlimited voice calls.
How can FreedomPop offer free voice and services?
“What we’ve been betting on is that a big enough percentage of people will like the service enough to upgrade into some sort of paid plan,” FreedomPop CEO Stephen Stokols told PCWorld.
Those assumptions have proven to be true with the company’s free data products, which include mobile hot spots, a USB device, and a sleeve for the iPod Touch.
“We found heavier users paying as they go,” he observed, “but what we’re finding more encouraging is that 30 percent of data users are going into a paid plan.”
In addition, the company is leveraging new technology to keep its pricing low. “We’re not using the voice network at all,” Stokols said. “We’re going VoIP over cellular, which has a significantly lower-cost base, and the quality’s just the same.” (Potential users: you should take into account VoIP’s history of somewhat spotty performance.)
If FreedomPop were using the voice network, the wholesale price for voice per user would be $30 a month. “By using VoIP, the cost is significantly lower to the point where 10 bucks is actually profitable for us,” Stokols said.
One of the advantages of FreedomPop’s technology is that it can be used on any handset without any modifications. “Everything is done at the app level,” Stokols noted, “so you could bring a Galaxy 4 to us and, without any effort, you could be getting free voice and free data.”
FreedomPop has chosen an interesting way to break into the wireless market, observed Michael Morgan, a mobile-devices analyst with ABI Research.
“Barriers to entry have been a problem for many of these kinds of services,” he told PCworld. “Many of them don’t stay around too long.”
“FreedomPop’s approach is interesting and novel,” he said. “I’m not sure it will work, but I’m glad someone is trying.”
If FreedomPop is going to succeed in today’s mobile market, it’s going to need more marketing muscle than it has flexed in the past, said telecom industry analyst Jeff Kagan.
“Nothing sells in the wireless world unless it’s marketed and advertised because this is a marketing battle,” he told PCWorld.
“FreedomPop’s name bubbles up now and again when it makes an announcement,” he continued. “That’s good, but it seems like most of its marketing is word of mouth, and word of mouth campaigns don’t work well in the wireless world.”