Feature Article

December 12, 2012

FreedomPop to Launch Fixed Broadband Access Service

It’s a matter of legitimate debate whether a “small” company can truly disrupt businesses as big as mobile communications or fixed broadband, even though most attempts at disruption are initially launched by “small firms.”

The key observation is that such “small” firms (Google and others) do not remain small if they succeed in creating or disrupting a market. You might argue that it sometimes takes a “large” firm such as Apple to disrupt or change a market as big as the “mobile phone” market.

So the key longer-term issue for firms such as FreedomPop, which have the stated intention of disrupting broadband access markets, both fixed and mobile, is whether FreedomPop can “get big, fast.”

None of that is clear, at the moment. But after having launched its mobile broadband service, FreedomPop now is launching a "fixed" service offering 1 Gbytes of free data in nearly all of the the 80 largest urban markets across the United States, with the new modems available in January 2013.

The services require a refundable $89 deposit that covers the cost of the modem.

FreedomPop is trying to disrupt U.S. broadband pricing, and in addition to the free allotment of 1 Gbyte compared to the free 500 Mbytes offered with the mobile version of the plan, offer low prices of 10 Gbytes for $10 a month.

Some might argue a cable modem or telco access $70-per-month plan with a 100-Gbyte or larger allowance offers even lower prices, but the issue is the lower threshold for FreedomPop.

Users who don’t use much data each month will wind up saving significant money, since they do not have to pay the threshold price of perhaps $50 to $70 a month just to use the first 10 Gbytes or 20 Gbytes of data.

As usual, any would-be disruptive startup firm has to hope its initial funding lasts long enough until the business can generate a self-supporting revenue stream, or uncover a revenue model if it is offering a free service.

FreedomPop founders have done so before, of course, as they launched Skype. But broadband access involves significantly-higher requirements for capital investment and operating expense, relative to an application business such as Skype.

But FreedomPop operates with a lighter-weight e-commerce approach, with a simple “broadband only” product suite and using wholesale access provided by Clearwire.

Even if one argues that FreedomPop’s addressable market includes mostly the lighter-user, lower-speed customer segment, it’s probably large enough to allow FreedomPop to gain a foothold in the business.

And as other disruptive firms have shown for decades, the key is often to get a foothold in a perceived “lower-value” segment of the market. Having done so, many firms have been able to move up the value curve, eventually going toe-to-toe with the top firms in any industry.

Right now, FreedomPop is simply trying to gain a foothold in a “value” segment of the mobile and fixed broadband market. Later, it can move up the value chain.

Edited by Braden Becker

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