FreedomPop Cell Phone Service Focuses on Providing Customers with Lowest Prices

In the United States, from the wealthiest entrepreneur to the poorest student, from teenagers to retirees, almost everyone has a cell phone. While cell phones were once a conveniently mobile alternative to landlines, to allow people to make calls outside of their homes, from almost anywhere in the world, they have now become much more than just phones. With the advent of text messaging and smartphones, many users now rarely use their phone for calling, opting instead to text or surf the internet using their mobile data or surrounding Wi-Fi signals. Most cell phone providers, especially the "Big Four" carriers, charge upwards of $40 per month for a cell phone plan. According to Paresh Dave's L.A. Times article, there's a smaller company, called FreedomPop, that is able to provide users with cell phone plans for less than $5 per month.

FreedomPop isn;t the ideal cell service provider for everyone. In fact, they only have about 2 million customers, compared to the hundreds of millions of subscribers at companies like Verizon or AT&T. About half of their users have service for "free," although they do have to pay a monthly fee of $7.99. The "free" portion of their service has limits on data usage, calls, and texts, and their customer service hasn't been rated very highly, but for many people, their low prices make the switch a no-brainer. Some of their most all-inclusive plans include unlimited talk, text, and data for around $20-30 per month, which is significantly less than their larger competitors. Users mainly have to have a credit card attached to their account, and they get charged extra fees for going over their allotted usage, but users seem to feel that the low prices make it worthwhile overall.

The company is able to keep prices so low by going against common industry practice. At its inception, the main focus of FreedomPop was to provide everyone with access to the internet. To do that, they chose to accept lower profit margins, which means they can charge less for their service. Even though the company's user base is small, it has had enough of an impact on the industry that large competitors like Verizon and T-Mobile are lowering their prices in response. The goal of FreedomPop is to gain as many customers as possible, around the world, both to achieve their vision statement and to maximize revenue. The more revenue they take in, the more room they have to cover their fixed costs and provide service at a low price. Besides the lower profit margins, FreedomPop cuts costs by minimizing the amount they spend on marketing and by doing careful research on exactly which potential customers they choose to target.

FreedomPop has received over $100 million in venture capital investment to keep doing what they're doing. They are also looking at an acquisition offer, but investors don't seem interested in selling the company. FreedomPop is different from other cell service providers. They handle customer service efficiently by providing refunds when they receive complaints (modeled similarly to larger companies like Google Express) because they have found that giving a $5 reimbursement immediately makes a customer more likely to stay with the company and provide good reviews. However, as would be expected with a company that provides service at an average of $15 per month, customer service and quality sometimes have to suffer to some extent. It's really a choice that each customer has to make. Do you pay more for service through a "Big Four" company (Verizon, AT&T, Sprint, or T-Mobile), or do you pay less for a up-and-coming company like FreedomPop?

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