FreedomPop’s Global SIM: the disruptive face of the new MVNO

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Mobile voice and data access is becoming commoditized in the same way that fixed-line broadband did, leaving operators to choose between fighting an access price war or moving up the chain into value added services. Their task is made more challenging by the rising tide of companies – giants and start-ups – which are adapting those Internet connectivity models for the mobile world at last, potentially robbing MNOs of voice, data and roaming fees with their SIM-only, WiFi-first approaches.

FreedomPop, which is backed by Intel, is one of the high profile ‘freemium’ MVNOs which is starting to export its US model around the world. It recently announced a new $50m round of funding, which will mainly support international expansion beyond its current markets in the US and UK. It has also announced a roaming service called Global SIM, which includes a personal hotspot and allows its customers to access 200Mbytes of data a month for free in 25 countries including the biggest European markets – that total will grow to 40 during 2016, extending beyond the US and Europe into parts of Asia and Latin America.

While SIM-only MVNOs like Truphone have been offering low cost cellular services for travellers for years, the new wave of services includes more data, often thanks to a WiFi-first approach which minimizes the MVNO’s cellular costs; the ability to keep the same phone number; and a wider choice of devices. Earlier this month, Microsoft announced an MNO-free SIM offering geared mainly to Windows 10 laptops and tablets, for instance. Google is expected to extend its Fi MVNO service around the world from this year too.

FreedomPop’s proposition is based around a personal hotspot, which can support several WiFi devices and costs $49.99. The SIM card costs an additional $10 (£10 in the UK). When the user goes beyond the 200Mbytes limit, additional data costs $10 per 500Mbytes.

As with its core service, users can earn extra data allowances by completing surveys, downloading vouchers and so on. FreedomPop’s value added services, such as rollover data and additional virtual numbers, can also be added to the Global SIM plan for small fees.

Steven Sesar, FreedomPop’s COO and co-founder, commented on the new round of funding: “FreedomPop has proven that new Internet business models work in the telecom space and has developed the technology to scale it globally. This new financing not only validates our capabilities, but it also ensures that FreedomPop has the capital required to become a top 10 global service provider. The financing also supports our global network launch, which is an exciting way to give consumers free Internet access across the world and eliminate roaming costs no matter where they are.”

Later this year, FreedomPop will expand beyond SIM cards into its own-branded handsets, one of the reasons why it secured funding from Intel last fall – the Android device will be co-designed around the larger firm’s SoFIA system-on-chip. This is not so much about chip sales for Intel, but about stimulating an approach which plays to its strategic advantage – WiFi-first. A key feature of FreedomPop’s handset, like one being planned by its rival no-frills MVNO Republic Wireless, is that it will be optimized for WiFi-first operation. Intel has had a high degree of power in the WiFi technology and services ecosystem, ever since it helped create the hotspot model with its embedded Centrino WiFi chipset. It is in the giant’s interests to see WiFi dominate wireless connectivity rather than cellular technology, a world in which it has consistently failed to grow significant influence or sales.

FreedomPop’s handset will be built to ease the WiFi-first process – in which the handset defaults to the WLAN, only transferring to cellular when there is no good WiFi signal, in order to reduce consumer tariffs and operator costs. It promises “sophisticated switching” to sense when the WiFi signal is poor, degrading or absent and to transfer the user seamlessly to cellular.

This is reminiscent of Google Fi, which includes software defined technology to select the best connection and transfer the user smoothly between multiple WiFi and cellular operators – though it is probably more likely that FreedomPop will use standardized mechanisms like Passpoint rather than homegrown technology like Google’s.

The connection speed can be controlled at device level too, enabling FreedomPop to offer ‘speed boosts’ to customers willing to pay extra. The SoFIA platform will allow the MVNO to white-list selected applications at device level, which means it could pursue sponsored data or toll-free arrangements with apps providers, without having to access the network owner’s server.

The device will be the vehicle to take FreedomPop to the next level, with aims to launch the phone, and associated services, in many countries.

It may look to consolidate its host MNO partnerships as it expands internationally – it currently works with Sprint in the US and Three in the UK, both traditionally pro-MVNO operators. However, it may adopt a dual-MNO strategy in the US once the smartphone launches as the Sprint network – running CDMA and unusual LTE bands – has roaming limitations. Many international MVNOs turn to an MVNE (mobile virtual network enabler) at this point, as Microsoft has done in a deal with Transatel (see Wireless Watch January 15 2016). The Microsoft SIM service will be based on Transatel’s 901 SIM card technology which works in 38 countries and uses an international MNC (Mobile Network Code) to enable multi-local connectivity. The company expects to increase its list of supported countries to 50 during this quarter.

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Caroline has been analyzing and reporting in the hi-tech industries since 1986 and has a huge wealth of experience of technology trends and how they impact on business models. She started her career as a journalist, specializing in enterprise and carrier networks and in silicon technologies. She spent much of her journalistic career at VNU Business Publishing, then Europe’s largest producer of technology publications and information services . She was publishing director for the launch of VNU’s pan-European online content services, and then European editorial director. She then made the move from publishing into technology market analysis and consulting, and in 2002 co-founded Rethink Technology Research with Peter White. Rethink specializes in trends and business models for wireless, converged and quad play operators round the world and the technologies that support them. Caroline’s role is to head up the wireless side of the business, leading the creation of research, newsletters and consulting services focused on mobile platforms and operator models. In this role, she has become a highly recognized authority on 4G systems such as LTE and WiMAX, and a prolific speaker at industry events. Consulting and research clients come from major mobile operators, the wireless supply chain and financial institutions.

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