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Startup wooing customers with free internet access

21 Dec

Don’t mess with Niklas Zennström. He’ll disrupt you.

For years, internet users in North America have listened to their big service providers tell them about how it’s so expensive and such a hardship to build and maintain networks, which has been the rationalization for a host of anti-consumer tricks ranging from ever-escalating bills to throttling to usage-based billing.

The launch of FreedomPop in the United States is further evidence that those rationalizations aren’t entirely true and that the cost of provisioning internet service is, in fact, going down. And it’s doing so quickly.

The Los Angeles-based startup, backed by Skype founder and serial disruptor Niklas Zennström and others, is launching free home internet service in early 2013. That’s right, “free” – as in free.

There are some caveats to the offer, but it’s important to remember that “free” part. Because it’s free.

First up, subscribers will have to buy the $89 Freedom Hub Burst, which looks very much like any wi-fi router. Secondly, the service will operate over wireless WiMax technology, which the company says will be faster than basic DSL. Thirdly, customers will get one gigabyte of usage included.

So, to summarize the downsides: you need equipment up front to provide speeds that aren’t at par with cable, with relatively limited monthly usage. But did I mention the upside – it’s free!

FreedomPop will also be selling more usage, up to 10 GB per month, with plans starting at $10 a month. The company says fewer than half of American households use more than 6 GB, so this should be plenty. The speeds and usage limits, meanwhile, are fine for people who aren’t doing a lot of video streaming.

As CEO Stephen Sokols puts it, “It’s going to be extremely disruptive.”

That’s putting it mildly. While big network owners are sure to pooh-pooh what FreedomPop is trying to do, if the company gains any traction – which isn’t hard to do when you’re offering “free” – it could lead them to lower prices on their highly lucrative lower-end services. And with cheaper slower speeds, the prices on higher speeds will necessarily have to head downward as well.

It’s not immediately clear how FreedomPop is going to make money aside from selling higher tiers of monthly usage, but the fact that the company is attempting this at all does highlight how cheap it can be to provide internet service if you’re not having to dig up streets to lay cables.

It’s also important to note that phone providers used to pooh-pooh Skype as well, but that startup ended up decimating their long-distance businesses.

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2 Comments

Posted by on December 21, 2012 in internet

 

2 responses to “Startup wooing customers with free internet access

  1. mcfudge

    December 21, 2012 at 12:23 am

    Rock on, Niklas Zennström. Just don’t sell our souls in the process.

     
  2. Jean-François Mezei

    December 21, 2012 at 1:07 am

    In Canada, 3web also had that “free internet access” marketing, and even said “free internet for life”. They got sued and this dragged for years. 3web brand was tainted and the company rebranded itself as CIA but that didn’t work out. Their assets were purchased by Distributel.

     
 
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