FreedomPop, which calls itself “America’s new free Internet company,” has just announced the release of its Burst wired/wireless router, a device that’s aimed at the home or small office, and which offers “100% free high-speed Internet.” After buying the router for $89, customers are entitled to 1GB of free data each month. They can earn unlimited data by “adding friends to their network via email and social media networks, and engaging in partner promotions,” perhaps printing a store coupon out to add 500MB. The router offers speeds of 10 mbps upload, which is faster than typical DSL services, and a little slower than the service that cable companies typically offer.
FreedomPop’s CEO Stephen Stokols explained in an email to Fast Company that the new service was born, in part, from frustrations with the U.S. model for broadband, which compares badly to other countries. “I know first hand how Ofcom [the national telecoms regulator] in UK has increased competition in the UK and how that results in lower prices,” Stokols said. “I also have been shocked by how the US carriers do not have that same pressure. As such, margins are 65% higher in the U.S. than the UK, 80% higher than France.”
Instead, Stokols suggests, the U.S. is an “oligopoly with essentially 2 option in any one market – Cable vs DSL. Any American who wants high speed internet has to pay around $50/month for unlimited downloads.” That’s okay for high traffic consumer, but Stokols pointed out that almost 70% of Americans consume under 10GB per month.
His company is choosing a different path, and is leveraging 4G networks from Sprint an Clearwire to create its new metered Net system, which covers about 120 million U.S. citizens in the top 80 markets. The service starts with a free tier, and includes monthly plans of up to 10GB with prices starting at $9.99. Stokols thinks this will enable over half the population to save over 80% on their broadband fees. And to sweeten the deal, there are no contracts.
In January 2012 a similarly disruptive effort came from small French company Free.fr, promising an all-but-free cell phone network which included unlimited mobile data. Later in the year it was proven that the upstart company really had upset the entrenched mobile network giants in the nation.
In a story on why U.S. broadband can’t compete to the nations Stokols names, Engadget learned from U.S. incumbents like Verizon and AT&T that they vehemently disapprove of the “unbundling” rules that freed up the so-called “local loop” between phone exchanges and homes and enabled super-cheap DSL broadband. There are initiatives underway to bring cheap broadband to the U.S.’s poorer homes, although they are suffering poor uptake rates. For higher income households one of the reasons for not “cutting the cable” for TV and Net service from the big players is that it’s tricky to source TV content other ways right now.