The Telegraph has reported that FreedomPop, a US mobile operator, has set up shop in the UK as the first part of an international expansion plan backed by venture capitalists. It will challenge such budget providers as Tesco Mobile and TalkTalk.
FreedomPop charges a one-time set-up fee of £7. After that, it offers a free basic service that includes 200 texts, 200 minutes of calls and 200 MB of data every month, with the latter being roughly equivalent to 100 web pages. After subscribers have used up this free allowance, FreedomPop will sell them packages that cost £4.99 to £16.99 per month. These packages offer unlimited calls and texts, but a set amount of data. Subscribers can earn more free data by completing third-party marketing surveys, and they may also buy more data.
FreedomPop is a Mobile Virtual Network Operator (MVNO) which means it doesn’t own any mobile masts or other infrastructure. It will buy capacity on the Three network and then sell or give it to its subscribers.
Stephen Stokols, the chief executive, came up with the idea of FreedomPop while working for BT. According to him, only half the subscribers in the US market buy extra capacity. Even so, FreedomPop will need to attract only 50,000 subscribers in the UK to become profitable.
Stokols had founded FreedomPop in 2011 after the BT board had rejected a proposal to fund a launch by the telecom’s retail arm. Gavin Patterson, who is now the chief executive of BT, had been running its retail division at the time. Patterson was also, until recently, an advisor at FreedomPop. He stepped down after the UK launch was planned for it will compete with BT’s own mobile operation which is itself a MVNO. In March, BT had re-entered the mobile market after buying EE for £12.5 billion.
FreedomPop plans to send as much of its traffic over WiFi networks as possible rather than mobile networks in order to reduce costs. Mr. Stokols announced he would go to the UK later this month in order to close a deal with BT that would grant FreedomPop access to its WiFi network which boasts roughly five milion hotspots.
Stokols is also in talks with two major high street retailers to increase the number of methods for subscription. Currently, subscribers will only be able to sign up online. FreedomPop has claimed that 250,000 Britons had expressed interest in signing up before this week’s commercial launch, and the company may have to cap subscriptions for the first few months to manage the resulting growth.