Traditional phone service providers have reason to fear FreedomPop’s latest news that the first truly free mobile phone service is scheduled to hit the market by the end of the year.
Today, mobile phone carriers charge customers three separate bills for data, text, and calling services on their phones. FreedomPop wants to change the face of mobile phones by selling Android phones with a free VoIP phone service. By utilizing VoIP, the “Freedom Phones” will combine talk, text, and data into a single service, and will then offer that service for free after customers purchase the phones.
Portable 4G LTE Hotspot
Already, freedompop runs a similarly themed service with mobile WiFi hotspots. For $200, customers can purchase the new Freedom Spot 5580 LTE mobile hotspot, and receive 500MB of free Internet access every month. Weighing in at only 3.5 ounces, the device fits in your pocket and can reach download speeds of 25 mbps. The battery lasts for up to 10 hours, and the WiFi can support 10 devices at once.
FreedomPop can get away with this crazy-sounding deal through what they call a “freemium” plan. Users are encouraged to sign up people they know with FreedomPop, and are rewarded with faster Internet. A similar plan will reportedly be implemented with their next project, the Freedom Phone.
By the end of the year, FreedomPop plans to release refurbished Android phones with free service plans to the public for a price tag between $99 and $199. All in all, the phones will offer 200 minutes of talk, unlimited texting, and 500MB of data. How can they afford to give away so many features for so cheap?
The trick is that VoIP calls utilize a phone’s data plan to connect to the Internet, and that text messages can also be easily transferred through the Internet. In practice, the phone only comes with a data plan, but it is through this one service that the phone is able to fulfill the same role as three. Since FreedomPop only has to provide one service, their running costs are much lower, and they can pass those savings on to their customers.
If the Freedom Phones prove to be a successful venture, mobile phone companies will have to drastically change their game plans if they want to keep up. Right now such a deal may seem too good to be true, but it could become an industry standard in the near future. When that happens, VoIP will suddenly begin to dominate the mobile scene.