FreedomPop launches $49-a-year plan for users who don't want unlimited

cell phones
The MVNO hopes to lure users with an "internet-centric" annual subscription model.

FreedomPop added a new annual plan to target users who aren’t interested in paying for unlimited data but want more than the company’s basic free service.

The MVNO’s new plan includes 1,000 minutes of voice, 1,000 texts and 1 GB of data a month for $49 a year. FreedomPop also introduced packages that couple a phone purchase with the new plan, including a year of service for users who pay $79 for the LG Tribute or $149 for Samsung’s Galaxy S5.

The company is positioning its new offerings as an alternative to unlimited data plans from major operators that typically cost $70 a month or more for a single line. FreedomPop said those plans are particularly costly for users who consume less than 3 GB of data per month.

“We’re moving away from the idea that a mobile service has to come with a monthly bill,” said Steven Sesar, FreedomPop’s chief operations officer, in a press release. “For a one-time purchase of under $80, you can get a smartphone and service and not have to think about ongoing payments. With U.S. mobile prices coming down, we felt it was time to lead the industry to even further price drops, offering massive discounts for annual plans like most online subscription companies have been doing for years.”

The plans are something of a new strategy for FreedomPop, which has gained traction by using a freemium model to entice users, then upselling them into bigger packages or other value-added services such as additional local numbers for users in foreign lands or a “safety mode” that prevents overage charges. It sells handsets as well as SIM cards enabling customers to activate their own phones.

The company’s free plan includes 500 MB of data, 200 minutes of voice and 500 texts per month. It has raised more than $109 million in financing.

FreedomPop has long used Sprint’s network to provide wireless service, but late last year it unveiled a partnership with AT&T, launching SIM cards and an LTE mobile hotspot that can be used on the nation’s second-largest wireless network.

CEO Stephen Stokols said the new offerings are designed to be “internet-centric,” enabling users to pay for only as much data as they need through an annual subscription model.

“FreedomPop has always been centered around an internet-centric model, and this plan builds off our strategy and fills a much-needed gap in the mobile market, while also putting pressure on carrier pricing,” Stokols said. “We’re curious to see how far ‘un-carrier’ carriers are willing to go here after we fire the first shot.”