There may be a new big player in the mobile phone industry. FreedomPop, a company that aims to give away free mobile subscriptions, just closed a round of funding that netted the company $30 million in funding. While other companies charge for mobile data and calls, FreedomPop is giving these services away, while they purchase the data at wholesale from larger wireless companies. For now, the service is free to attract customers. If customers go over specific allotments, they will be charged.
Although many think that this is not a profitable model, many customers are paying. There is an a-la-carte menu of extra services one can pay for if they do not like the small allotments in the free plan. In a funding round lead by Partech Ventures, FreedomPop brought its total funding to $49.3 million in the past three years. FreedomPop, while profiting significantly less than other wireless companies, saves money by buying services from other wireless companies. FreedomPop does not own its own wireless infrastructure. The overall goal is to attract as many customers as possible.
Right now, about half of FreedomPop customers are paying, so the more people signed up to the service means more revenue for the young company.