FreedomPop is doing something that no one else in the mobile service arena is doing. The way traditional service providers work is by purchasing a talking minutes, data, and SMS in bulk from large carriers like AT&T, and then reselling those services to customers at a markup to create their profit. FreedomPop on the other hand is purchasing only data from these large service providers, and then using other services to support voice and SMS features.
Voice services can be supplied from a data plan by using a technology call VoIP, which transmits sound digitally through a data connection. SMS messaging can be supported using only a data connection as well through various protocols and applications on users’ smart phones. By purchasing only data from the large service providers, FreedomPop is able to save money on their contracts, and in turn they are able to pass those savings onto their customers. Will this business model work out for them in the end? Only time will tell, but the numbers are looking strong for them right now. As of the time of this writing, FreedomPop has raised a total of 59 million dollars over the past three years, has hundreds of thousands of customers, and show no signs of slowing down. Sprint is certainly taking them seriously. They were in talks with FreedomPop in June 2014 to buy them out for somewhere between $250 million and $450 million.
FreedomPop was originally founded by CEO Steven Sesar and Stephen Stokols in 2011. Before deciding to start FreedomPop, Stephen Stokols worked as the CEO of a video-chat entertainment startup by the name of Woo Media. Using Clearwire’s 4G network, the company began to offer mobile and wireless internet services in the United States, and was successfully able to convert 20% of its free user base to paid subscribers in December 2012.