Cellphone firm offers free voice, texts and data package

A firm that already offers free fixed-line and mobile broadband services is now offering a totally free of charge cellphone package including voice calls and texts. And not surprisingly there are some major catches.

The company, Freedom Pop, offers a range of freemium services. Last year it launched a special iPhone case with a built-in Wi-Max modem that gives users up to 500MB of free data a month.

Now the firm is offering a free cellphone package with unlimited texts, 500MB of data on a 4G connection and 200 voice call minutes (with unlimited calls to other people on the same service.) For additional data you can pay two cents per megabyte or pay for a monthly plan at $18 for 2GB or $29 for 4GB, while unlimited calls are $9.99 a month.

What’s the catch? Well, you can’t bring you own phone and will have to buy from an as-yet-uncomfirmed range of Android handsets provided by FreedomPop and running a customized operating system. Most people are guessing these will be older models and you’ll be paying a full unsubsidized price.

The other big issue is that the voice calls are actually routed as Voice Over Internet Protocol calls. That means not only are you reliant on WiMax for your 4G connections, but if you’re out of range for WiMax you’ll be stuck hoping old-fashioned CDMA is enough to keep the call going. (The data you use in making and receiving these voice calls is not counted towards the data allowance.)

Paying for the phone up front is something of a gamble (compared with getting it cheaper elsewhere) as the service is reliant on FreedomPop being able to keep getting access to networks as a reseller, or even a re-reseller. If any of those deals break down, the service would likely disappear quickly.

The deal might be more attractive in a few months however. FreedomPop is said to be negotiating with Sprint to not only access its network (including LTE 4G) but to be able to offer some of its handsets. In the long run, it may even be able to let you use the service with any phone you already own that runs on Sprint.

On the face of it, the finances don’t seem to make sense as the company is relying on coverage charges and people paying for monthly plans to an extent that not only turns a profit but covers the cost of the freeloaders. However, the firm insists the model works, claiming that its existing broadband services are generating a gross profit margin of 50 percent.