Why FreedomPop is creating competition in the Telco industry

Intro – 60 second guide

Here are our findings on the recent news about the latest MVNO like company, FreedomPop and their global WiFi network, allowing users to connect in over 25 countries around the world. There are more details following article.

  • FreedomPop is an American company which allows users in the US and the UK to use their mobile phones in more than 25 countries around the world.
  • With advances in technology and the ways in which users consume media on demand, WiFi hotspots will become more popular and MVNOs which offer this as a part of their prepaid plans will attract an increase in market-share.
  • Messenger apps such as Skype and WhatsApp will only increase in usage. Mobile data allowances and alternative network connections will be important feature when users shop around for SIM only plans.

Who are FreedomPop and what do they offer users?

FreedomPop

FreedomPop is a new company operating in the teleco industry but is technically not a traditional MVNO. FreedomPop is a disruptive company in that they do not charge their users for calls, texts and mobile data on their entry level plan.

By trying to steal customers away from the traditional mobile network carriers, FreedomPop is offering users which subscribe to their plans free basic calls and texts as well as low cost WiFi services, through their global hotspots program.

The FreedomPop business model operates in the way where they make a loss on their voice and text services, all offered to users for free, with extra mobile data, voice mall and minutes charged for at a flat rate.

Unlike other MVNOs which operate on the business model of buying network access from the major telcos at wholesale rates and then providing great value plans for their users. FreedomPop buys only mobile data from the carriers as part of their unique business model.

FreedomPop works in the exact same way as other normal MVNOs do, by providing SIM only plans for their subscribers.

FreedomPop is currently only available for UK and US users, but no doubt in the coming year Australian’s will also be able to sign up. FreedomPop also has plans for expansion internationally, into new emerging markets in Europe, Asia and South America.

What are FreedomPop’s global expansion plans?

The plan for FreedomPop is to expand to one more larger market by the middle of 2016, continuing to provide the same current levels of excellent customer service and SIM only plan flexibility.

With the use of global hotspots as the method which they use to aggregate cellular capacity, via accessing the mobile networks within 25 countries around the world, they can provide FreedomPop UK and US users with a free and seamless data connection

FreedomPop users will be able to connect to networks all over the world, with the first 25 countries including:

  • United States, United Kingdom, Germany, Greece
  • Italy, Spain, Switzerland, Poland
  • Austria, Netherlands, Belgium, Hungary
  • Luxembourg, Sweden, Finland, Slovakia
  • Norway, Denmark, Ireland, Croatia
  • Portugal, Romania, Bulgaria, Czech

Why is FreedomPop a disruptive company?

This MVNO has the potential of really making trouble in the existing global Teleco markets, due to their free offerings of calling minutes, texts and mobile data.

National carriers world wide make a lot of money from international calling and texting, when a Mobile Virtual Network Operator comes along and offers this to their users for free, you know the traditional telco companies won’t be happy.

FreedomPop operates a business model which is based around offering users free but limited services, including 200 minutes per month, 500 texts and 500MB of mobile data per month, all on their “Free 500MB” plan.

After the basic plan the paid ones range from $10 to $60 per month, but as you are connecting to WiFi hotspots nation wide and not the 3G or 4G networks, speeds are very fast.

“FreedomPop has proven that new Internet business models work in the telecom space and has developed the technology to scale it globally,” said FreedomPop co-founder and COO Steven Sesar.

Will companies like FreedomPop be the death of LTE?

In Australia the 4G LTE networks operated by Telstra, Optus and Vodafone Australia have rapidly developed in the past few years as the major nationals compete for market-share in an ever increasing competitive market.

With increasing investment and upgrading of their existing networks and infrastructure, as well as trying to attract new customers, MVNOs which operate on similar models as FreedomPop will only add more strain on their revenues.

All three national carriers are trying to reduce churn, but with competitive priced plans, such as those offered by Amaysim and Boost Mobile, they are having a hard time convincing customers to stick around.

As Vodafone Australia has experienced in the past, customer satisfaction is highly important and when new technologies, better networks or advances in technology come along, users expect access to new functionalities and if not received, talk with their wallets.

But with VOIP calling services and messenger apps gaining in popularity, service providers which offer SIM only plans which can allow users to connect to WiFi hotspots, with nation wide coverage will be the death of traditional carriers.

In addition to this, OTT services such as Stan and Netflix are changing the way in which users are consuming media, with MVNOs offering SIM only plans, featuring generous data allowances. These are becoming the norm and what consumers expect, allowing them to access content on demand at their time of choosing.

 

Neil Aitken

Having worked in 3 countries for 4 telcos on both voice and data products, Neil is in a position to give you the inside track. Get beyond the marketing messages to the best plan for you.