"Freemium,” the business model where a provider gives away a base level of service, then makes revenue by upselling additional value, has become quite established in the application space.
In the communications service provider space, it arguably has been the case that there have been more experiments with advertising-supported approaches, but we will probably continue to see some variants of the freemium model in telecommunications.
Over the past decade and a half, for example, lots of U.S. firms have contemplated, and a few have attempted, to create “free” broadband access services, with the intention to make revenue by advertising or selling premium tiers of service. There are no examples of outstanding success one easily can point to, though.
But that is not going to keep firms from trying. FreedomPop, a start-up backed by Skype (News - Alert) and Joost co-founder Niklas Zennström, hopes to create a freemium service for broadband access in the U.S. market.
FreedomPop says it will launch in 2012, with a revenue model similar to Dropbox (News - Alert), the cloud-based storage service that also uses a freemium model. Dropbox offers up to 2 Gigabytes for free, and sells access to additional storage for a monthly fee in different tiers. Freemium model
Here’s how Spotify, the streaming music service, operates on the Telia mobile network, for example. Though most people use the “no incremental charge” version, nearly 10 percent pay for a premium tier of service.
Aside from facing the same financial obstacles any such undertaking would, some might say the uncertainty about LightSquared’s (News - Alert) launch remains a question mark, as well. FreedomPop says it will launch in 2012, on a network that has not been cleared to operate, and has not yet built its network. Granted, LightSquared is going to piggyback on Sprint’s (News - Alert) network, in all likelihood. But that assumes it gets regulatory clearance to proceed and raises the capital to do so. Right now, 2012 looks like a bit of a stretch.
Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.
Edited by Rich Steeves