FreedomPop targets Lifeline providers with digital platform

Smartphone
The MVNO FreedomPop hopes to become a bridge between Lifeline service providers and consumers.

FreedomPop is hoping to cash in on the FCC’s overhaul of the Lifeline program, which subsidizes telecom devices and services for low-income consumers.

Lifeline offers a $9.25 monthly discount on broadband or phone services for users near or beneath the poverty line, and the program expanded gradually under the Obama administration. But earlier this year, new FCC Chairman Ajit Pai directed the agency to eliminate the federal approval process for Lifeline service providers, effectively returning those processes to the state level.

Critics say the move will require would-be service providers to undergo a lengthy and perhaps prohibitively burdensome course to extend offerings to Lifeline participants. But FreedomPop, an MVNO that provides wireless services in North America and Europe, is licensing its platform as a way for companies to bring offerings to market through Lifeline more simply and affordably.

The company announced a deal with one Lifeline service provider, PWG Solutions, and said it will launch with a few more companies in the coming months.

“It’s pretty much impossible to get certified across 30 states, so you’ve got these (potential service providers) who are just stagnant,” FreedomPop CEO Stephen Stokols said recently. “Rather than just trying to come in and outdo them, we’re literally just going to empower them, basically extend our technology to these guys so they can modernize.”

FreedomPop uses a freemium model to entice users, then upsells 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.

As the Lifeline initiative illustrates, though, FreedomPop is aggressively expanding far beyond the traditional MVNO model. In February it began licensing its platform to major carriers, beginning with a deal enabling Wind-Hutchison Italy, the country’s largest mobile network operator, to use its proprietary monetization platform to help boost customer acquisition and convert free users into paying customers.

In November FreedomPop launched an online store for used smartphones, and in October it announced a joint venture with Dish Network to provide free mobile services in Mexico. The company sees the decentralization of the Lifeline program as an opportunity to become a bridge between service providers and low-income consumers.

“The key is the state subsidies,” Stokols said. “What we’re doing is saying look, despite the fact that Pai has gutted (Lifeline), and no new guys can get (federal) approvals, we’ll empower these guys…. What we’re saying is we’re going to come in and digitize all these guys.”