FreedomPop, a company that sells wireless hotspot devices with free mobile data, is planning to offer a full-blown cellular service with free voice calls and text messages this summer.
According to AllThingsD, FreedomPop has been amassing a pile of refurbished phones that once ran on Sprint’s 4G WiMax network, such as the Samsung Galaxy SII and HTC Evo 4G, and plans to sell them for under $200 with no contract. In exchange, FreedomPop subscribers will get 500 MB of data and 200 voice minutes (via VoIP) per month, plus unlimited text messages.
FreedomPop hopes to make money by selling add-on services, such as unlimited calling, additional data and faster connection speeds. As AllThingsD’s Ina Fried points out, it’s a strategy reminiscent of dotcom-era companies like NetZero, which gave away basic dial-up Internet service for free. (Incidentally, NetZero rose from the dead recently with free wireless Internet service, but it only lasts for a year before customers must pay for subscriptions.)
Is FreedomPop worth considering? Sure, but only if you’re keenly aware of its hidden costs and gotchas. And from what I’ve seen of FreedomPop’s existing free data service, the company seems to try its best to keep potential users in the dark.
Here are a couple things to know about FreedomPop’s free data service, which is already available today:
- If you use less than 5 MB of data in a given month, you get charged a $0.99 “Active Status fee.”
- By default, when you reach your final 100 MB of data in a given month, FreedomPop automatically charges $10 to fill your plan back up. To avoid the automatic charge, you must change your billing settings on FreedomPop’s website.
Finding the above stipulations on FreedomPop’s website isn’t easy. There’s no mention of them on the home page, nor on the terms of service page that’s linked from the home page. You’ll only find them on a separate “Service Plan, Equipment, and Payment Terms” page, which is linked from the main terms of service. Even then, the part about extra fees is buried beneath six other sections of legalese.
FreedomPop does give subscribers a chance to opt out of automatic refills on the final service activation page, but the wording (“To ensure uninterrupted service, top up my freedompop account”) is vague. It doesn’t say that the charge is recurring, nor does it mention the 100-MB trigger.
FreedomPop also peppers users with additional offers during the sign-up process, while engaging in some classic sneakiness: On one page, an offer for 2 GB per month is advertised as “100% FREE” and selected by default, while the fine print mentions that a charge of $17.99 kicks in after one month. Another page offers faster speeds for $3.99 per month with a big green “Get Offer!” button, while the option to pass is presented in tiny text.
Other aspects of FreedomPop’s service are hidden from prospective customers as well. You can’t find out the cost of the devices without going through the sign-up process, during which you must enter an e-mail address and mailing address. And while FreedomPop’s home page advertises 4G speeds, users must pay $3.99 per month extra to guarantee the full speed that the network allows.
The fees themselves don’t bother me too much. They’re no worse than the below-the-line fees and value-added services of major wireless carriers, and if you’re mindful of FreedomPop’s policies, it’s certainly possible to get free data. I’ve used the service in Cincinnati, and it works.
I just wish that FreedomPop wasn’t so sketchy in the way it presents its services. It’d be easier to get excited about the upcoming free wireless service if the company was more transparent. Instead, I’m wondering what other new ways FreedomPop will invent to extract money from unsuspecting users.
UPDATE: FreedomPop CEO Stephen Stokols wrote in to address a couple of the points above. First, he pointed out that users receive an e-mail alerting them to the $10 automatic top-up after they sign up. FreedomPop began sending those e-mails to new users about 2.5 months ago. Second, starting last month, FreedomPop began waiving the $0.99 “Active Status fee” for new subscribers, and will eventually be doing so for existing users. It seems FreedomPop is working to address criticisms, but the company still has more work to do on being up front about the cost of the hardware and other fees before people sign up, not after they’ve handed over personal details and/or payment info. That issue, combined with the additional services that FreedomPop tries to sneak past new users, is what ultimately leaves a sour taste, not the fees themselves.