FreedomPop releases $169 Galaxy S II, drops unlimited calling, texting to $4.58/month

'Good probability' that FreedomPop will expand to another U.S. carrier beyond Sprint
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Sprint (NYSE:S) MVNO FreedomPop today said it will sell the Samsung Galaxy S II for $169 alongside its HTC Evo Design WiMAX, the company's first smartphone that it launched in October for $99. Further, FreedomPop cut in half the cost of its unlimited calling and texting service, to $4.58 per month.

freedompop galaxy s II

FreedomPop's Galaxy S II

Importantly, neither of FreedomPop's phones supports LTE connections. Both the Evo Design and Galaxy S II connect to Sprint's slower CDMA network and its aging WiMAX network. FreedomPop said it expects to release LTE phones later this quarter.

FreedomPop CEO Stephen Stokols said the company has spent the past few months improving its customer service and working on new, value-added services to offer its customers. He said the company is now ready to add additional customers via its new phone and cheaper service.

Indeed, FreedomPop said it has recorded "significant demand" for its service, and has received inquiries from roughly half a million potential customers. Like most MVNOs, Stokols said FreedomPop can't disclose its customer numbers, but said it's a six-digit figure that has been growing by more than 10 percent each month. USA Today reported FreedomPop expects to end the first quarter with around 200,000 customers.

Further, Stokols said later this year FreedomPop hopes to announce progress on two major fronts: support for Apple's (NASDAQ:AAPL) iPhone and the addition of a second wireless carrier partner. FreedomPop late last year launched a bring-your-own-device program that allowed customers to use their existing Sprint devices onto FreedomPop's service. However, the iPhone was noticeably absent from the list of supported devices. "We're working on the iPhone on a couple of different levels," Stokols said, without providing details.

As for expanding beyond Sprint, Stokols said the company plans to do that in 2014. He declined to name the carrier, but said that "there's a good probability that in 2014 we'll add a second carrier." FreedomPop initially launched its freemium wireless service on Clearwire's network, and last year the company transitioned to Sprint's CDMA and LTE network shortly before Sprint completed its acquisition of Clearwire. T-Mobile US (NYSE:TMUS) is a likely candidate for FreedomPop since a wide range of MVNOs have launched on T-Mobile's network during the past several years.

FreedomPop's business model centers on its 500 MB of free data per month. After customers purchase one of FreedomPop's devices, they can then use the 500 MB of free data per month, and FreedomPop makes money by selling those customers value-added services such as extra data, voice calling services or text messages. When FreedomPop launched its first smartphone last year, the Evo Design WiMAX, it offered VoIP-powered unlimited calling and texting services for an extra $10.99 per month. Now, with the release of its Galaxy S II, FreedomPop is cutting the price of that value-added service in half.

Interestingly, Stokols said that FreedomPop's most popular value-added service, across all of its devices, is the ability to roll over its 500 MB of free data. For $3.50 per month, customers can essentially save their 500 MB and then use it at a later date, rather than losing it at the end of the month. Stokols said another popular value-added service is FreedomPop's speed boost, which costs $4 per month and provides customers with the fastest data speeds possible--it also gives those customers' data transmissions priority over the transmission of non-paying customers. Stokols said the sale of these and other value-added services have been so successful that "we're not concerned about breaking even on voice and text" at the $4.58 per month price point.

FreedomPop first launched in October 2012 offering 500 MB of free wireless data (mainly through USB modems and hotspots) in the hopes that customers would pay for extra data and other services.

For more:
- see this FreedomPop release

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