Policy

Free Wireless Broadband? Sort of

NetZero, FreedomPop Look to Upsell Users on 4G Internet 4/02/2012 12:01 AM Eastern

Big cable operators’ erstwhile wireless partner — Clearwire — has cut deals with two companies, FreedomPop and NetZero, that are promising to deliver free mobile broadband to millions of Americans.

But of course, there’s a catch: Users are capped on the amount of data they will be allowed to access gratis. The idea with the “freemium” model is that some portion of the user base will turn into paying customers.

NetZero is offering consumers free basic service for a one-year promotional period, after which data plans start at $9.95 per month. The company, a subsidiary of United Online, launched NetZero 4G Mobile Broadband last month, touting availability in more than 80 cities over Clearwire’s WiMax network.

Meanwhile, Los Angeles-based FreedomPop claims it will really offer free 4G wireless service forever — not just as a onetime signup stunt like NetZero. In addition, while NetZero is offering up to 200 Megabytes per month for free, Freedom- Pop is currently looking to provide up to around 1 Gigabyte per month, according to FreedomPop vice president of marketing Tony Miller.

“We’re going to give a significant amount away for free,” Miller said. He added that FreedomPop can make its business model work if just 15% of the users pay overage charges or opt to purchase value-added services.

The 15-employee startup, backed by Skype and Joost cofounder Niklas Zennström, expects to launch service in the third quarter of 2012 with Clearwire and another nationwide carrier, Miller said.

In addition to targeting marketing offers to FreedomPop users, the company will offer additional Internet- based services through partners. “We want you to use as much as possible — movies, music, games,” Miller said.

Clearwire’s 4G WiMax nationwide service covers more than 130 million people in the U.S., and the company plans to overlay that with Long Term Evolution technology to provide faster speeds of 50 Megabits per second or more next year. “Enabling innovative 4G business models with our mobile broadband network is a key part of Clearwire’s wholesale business strategy,” Clearwire senior vice president of wholesale Don Stroberg said in a statement.

Clearwire is majority owned by Sprint Nextel with investments from Comcast, Time Warner Cable, Bright House Networks, Intel Capital and Google.

Over the last several years, Comcast and TWC were reselling its services, marketed as an extension of their cable broadband services. However, that arrangement came to an end after the MSOs entered into a deal with Verizon Wireless.

Under that deal, the cable companies — which also include Cox Communications — are proposing to sell Advanced Wireless Services spectrum to the carrier, and the MSOs and Verizon Wireless have agreed to co-market each other’s products. Those deals are currently undergoing regulatory reviews.

As the largest wireless carriers cement their 4G positions, and with MSOs looking to bundle wireless with their triple plays, will the “free” wireless broadband guys survive?

“There is plenty of room for smaller companies with innovative ideas,” said Jeff Kagan, an Atlanta-based independent technology analyst. “Whether they will be around for the long run is another question. Most won’t.”

October
November