Budget providers, TalkTalk and Tesco Mobile are receiving a challenge from a U.S. mobile operator now offering free 4G mobile service. According to an article in The Telegraph, FreedomPop has set up a venture capital backed expansion plan in the UK in its first international phase.
They will be offering free basic monthly services after an initial set up fee. The basic services will include:
* 200 minutes of calls
* 200 texts
* 200MB of data (equivalent to about 100 web pages)
FreedomPop then plans to make a profit by selling additional/optional packages for customers to increase the services needed to meet their usage. Another offer for customers to gain access to increased free services will be to complete third party marketing.
The company will be called Mobile Virtual Network Operator (MVNO) and will not own any infrastructure or mobile masts. It will target the most price-sensitive segment of the market, by buying capacity on the Three network and then give or sell to subscribers.
Stephen Stokols, the chief executive of FreedomPop is who came up with this new marketing strategy. He was working with BT at the time and found that in the US market only about half of the customers will buy extra capacity. Stokols states FreedomPop will only have to come up with 50,000 subscribers and they will have positive cash flow in the UK.
Stokols founded FreedomPop in 2011 while living in the United States and after leaving BT. FreedomPop’s goal is to reduce its cost by sending a lot of traffic over WiFi networks rather than mobile networks. Stokols is traveling to the UK later in the month in hopes of sealing a deal with his former employer to gain access to the BT WiFi network and their 5m hotspots.
To sign up for FreedomPop will initially have to be done online, but Stokols says he is negotiating with two major high street retailers. It is estimated there are already 250,000 Britons interested in this plan before it has even launched. FreedomPop may have to cap their subscriptions in the first few months to be able to manage their own growth.