Bloomberg News

Skype Founder’s FreedomPop to Offer Free Web Access for Homes

December 12, 2012

FreedomPop Inc., backed by Skype co- founder Niklas Zennstrom, is starting a free wireless Internet service for the home that will compete with Web connections from telephone and cable companies.

The Los Angeles-based startup said today it began taking orders for an $89 modem that will provide online access to as many as 10 Wi-Fi-enabled devices in a home at speeds faster than digital subscriber lines. The device will start shipping in January, with 1 gigabyte of data per month for free. Consumers may purchase additional bandwidth by signing up for plans starting at $8.99 a month for 10 gigabytes.

The service is the second from FreedomPop, which in October began offering free Internet for iPhones and iPods equipped with a special sleeve. That lets users tap into Clearwire Corp.’s fourth-generation wireless network and use up to 500 megabytes of data for free. More than 20 percent of users have bought extra capacity, helping speed the introduction of home service, Chief Executive Officer Stephen Stokols said in an interview.

“We see this as a huge opportunity for us,” Stokols said. “You’ve got this opportunity to cut 80 percent of your cable bill. The carriers are going to hate us. We are going to be stealing their share and their customers. We think this is going to be more disruptive.”

More of the company’s revenue next year will be generated by online access for homes than smartphones, Stokols said.

‘Disruptive Force’

The new service “is in line with what FreedomPop is trying to do to be a disruptive force for broadband pricing,” Rich Karpinski, a senior analyst at research firm Yankee Group, said in an interview. “There’s absolutely an opportunity there.”

FreedomPop, founded in 2011, has raised $7.5 million in venture capital and expects to attract another $15 million to $20 million by early next year, Stokols said.

“We are pretty far along with some major investors,” he said.

Zennstrom co-founded Web-calling provider Skype with Janus Friis and sold the company in 2005 to online auction site EBay Inc. for $3.1 billion. Later, a consortium that included Zennstrom bought Skype back and sold it to Microsoft Corp. in 2011 for $8.5 billion in cash. Zennstrom also co-founded startups including Kazaa BV, Joltid Ltd. and Joost.

To contact the reporter on this story: Olga Kharif in Portland at okharif@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net


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