LightSquared, a wireless broadband company building a nationwide LTE and satellite network, struck a wholesale deal with FreedomPop, a startup backed by Skype and Joost co-founder Niklas Zennström that is claiming it will offer free broadband and voice services "to all Americans."
FreedomPop is funded by Zennström's venture capital firm Atomico. The company will launch in 2012 with its "ultimate objective to ensure that every American has access to fast, free and convenient communication services," according to a joint press release issued Thursday by LightSquared and FreedomPop.
In an email, FreedomPop chief operating officer Matt Ingrid compared the company's business model to that of Dropbox, the online storage service. Dropbox offers up to 2 Gigabytes for free, and sells access to additional storage for a monthly fee in different tiers.
"We're building a new kind of company we call a 'Webco' (vs. telco), i.e. economics of a Web company (no network, no high cost base, 100% online only)," he wrote.
FreedomPop said it will initially target "underserved markets" with services running on LightSquared's 4G LTE network, which is slated to come online starting in the second half of 2012.
"The Internet is a right, not a privilege," Ingrid said in a statement. "With the economic efficiencies delivered by LightSquared's wholesale business model, we can achieve our objective to deliver flexible high-speed wireless access to anyone at a fraction of the cost and inconvenience seen in today's market."
LightSquared has come under fire from lawmakers because its network has been shown to interfere with GPS service. On Wednesday, LightSquared said that independent testing by Alcatel-Lucent shows that it is "well on its way" to resolving the issue of interference to sensitive GPS receivers from in-band transmissions. The company has already modified its proposal to the Federal Communications Commission, with plans to put more spectrum space between it and the GPS band at launch, to cut power and to invest in a technological fix to the interference issue.
LightSquared is building out a nationwide, wholesale-only 4G LTE network integrated with satellite coverage. The company, which now has signed agreements with 31 customers, has received more than $14 billion of private investment for its eight-year buildout plan. Reston, Va.-based LightSquared is owned by private-equity firm Harbinger Capital Management, which is headed by Philip Falcone.
In June, Sprint Nextel entered into a 15-year agreement with LightSquared for spectrum hosting and network services under which LightSquared will pay Sprint $9 billion and provide $4.5 billion in usage credits over the first 11 years.
Zennström, along with Janus Friis, founded Internet-phone service Skype. Skype was acquired by eBay, then spun off before being acquired by Microsoft this year for $8.5 billion. The duo also were the founders of Joost, the Internet TV venture that flamed out after raising more than $45 million from Viacom, CBS and others.