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Freedompop to Offer Free Smartphone Services

Stocks in this article: S T TMUS VZ CLWR

NEW YORK ( TheStreet) - Freedompop is trying to shake-up the U.S. cell phone industry by offering customers free monthly smartphone services. The wireless provider won't be giving you everything you have with your current Sprint (S), AT&T (T), T-Mobile (TMUS) or Verizon (VZ) deal for free - but it could be more than enough to lure a good number of customers away from the big guys and rewrite the rules governing a maturing industry.

Under the new, no-contract plans privately-held Freedompop wants you to buy an Android phone (as yet unnamed) and you'll receive 200 minutes of talk time (plus unlimited calls to other Freedompop customers), 500 MB of data and unlimited texting for free each month. Need more talk time? That will cost you. $10/month for unlimited voice calling minutes. It's any additional cellular data, which Freedompop will be getting via Sprint's 4G WiMAX (and hopefully LTE in the future) networks that will really cost you.

Sprint Nextel, which is the object of takeover bids, was gaining 1.2% to $7.28.

Freedompop is teasing the new service which may be introduced sometime this summer. Few other details have been made public.

But, Forbes reports that Freedompop will sell a number of refurbished Android phones - such as HTC's EVO 4G and possibly Samsung and LG models - for $100 to $200. There is also a chance Sprint's Android customers could be able to switch their current phones to Freedompop.

Doing some quick math, it's estimated the free service being offered, plus the unlimited voice option and an additional 2 gigabytes of data will cost a total of $28 per month. A similar "Share Everything" package from Verizon costs more like $100/month.

Although unconfirmed, Freedompop will depend on VoIP (Voice over Internet Protocol) technology to handle voice calls. Routing voice calls as data is cheaper for providers than using cellular system. A rival bargain carrier, Republic Wireless ($19/mo) utilizes VoIP to keep prices low. Some T-Mobile handsets allow customers to route voice calls over nearby, friendly Wi-fi networks. The only problem we've found is that the quality of VoIP-on-smartphone clls is not always as good as a cellular connection.

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