‘Free Mobile Phone Service for All’ Coming to the UK
FreedomPop, a US company, has announced that it will offer SIM cards that offer 200MB of data, 200 texts and 200 minutes of voice calls per month using the cellular network at no cost. The company already offers a similar service in the US and is approaching 1 million customers in that market. The UK represents the first international expansion for the company ; it claims that the service offering is equivalent to average consumer usage in the UK.
Monetising free SIMs
FreedomPop’s business model is to charge users for additional data and other services such as anonymous browsing, free international calls etc. The BBC reported that the company has 51% of its US customers on a free package and the rest paying for additional data and services. The additional paid-for services have very high gross margins.
Compared to the more traditional MVNOs, FreedomPop can be classified as an all-IP MVNO. Through its partnerships with carriers, the company essentially pays for only data and all other services are IP-based, be it voice or messaging.
Freemium model focussed on Low-Tier
According to co-founder Steven Sesar, "In the UK there is a lot of interest in the lower-use end of the market which is where we plan to wipe out the guys offering £5-£10 data plans". With voice becoming a commodity, data has become the opportunity for both MNOs and MVNOs. FreedomPop claims that it needs only 30% paying subscribers to make this freemium model work. While the service may not witness widespread adoption, the challenge is to sustain this model in a saturated market before reaching full potential.
On a related note, I’m unable not to draw your attention to the 2014 movie Kingsman: The Secret Service, an adaptation of ‘The Secret Service’ comic series. Here, Samuel Jackson offers free mobile services to work his evilness.