Freedompop to Offer Free Smartphone Services

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.

Freedompop currently offers varying degrees of free Internet connectivity for your PCs, laptops, tablets and connected devices. Freedompop's difference is that instead of requiring a wire to come into your home (such as cable). Freedompop broadband service are delivered via a cellular, 4G connection. Freedompop gets 4G/WiMAX bandwidth from wireless provider Clearwire ( CLWR).

Again, you have to buy the hardware the Wi-fi modem, upfront - either a battery operated portable or a a home/desktop model. Freedompop gives you a small amount of free service each month. You can also purchase larger amounts of faster data - up to 10 GB for $19/month. I have been testing Freedompop's home Internet service for the past few weeks and, with one or two caveats, can highly recommend it for many users.

Free smartphone service, though, might very well be a huge lure. It will be interesting to try Freedompop's system to see just how well it actually performs.

--Written by Gary Krakow in New York.

>To submit a news tip, send an email to: tips@thestreet.com.
Gary Krakow is TheStreet's senior technology correspondent.

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