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Super Cheap Mobile Service FreedomPop to Offer Family Plans

FreedomPop founders Stephen Stokols (L) and Steven Sesar.FreedomPop founders Stephen Stokols (L) and Steven Sesar.
FreedomPop founders Stephen Stokols (L) and Steven Sesar.Photograph courtesy of FreedomPop

Reacting to the onslaught of unlimited mobile data plans, Wi-Fi-oriented wireless carrier FreedomPop is adding family plans to its line up of free and low-cost offerings.

FreedomPop, a “virtual” carrier which leases wireless airwaves from Sprint (S) and AT&T (T), said its new entry-level family plan would include two free lines with additional lines priced at $5 per month each. Each account gets 1 GB of data to start, plus an additional 500 MB per line and includes unlimited voice calls and texting.

“The whole family plan dynamic in the U.S. has kind of moved towards unlimited everything,” CEO Stephen Stokols tells Fortune. “The reality is a lot of users don’t need unlimited or can’t afford unlimited.”

The four major carriers have been moving away from data allowances and introducing lower cost unlimited data plans since last summer. Still, all of the plans start at $60 or more. Even with four lines, the plans usually cost $40 to $50 per line (Sprint is currently running a promotion offering up to five lines for only $90 for one year).

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FreedomPop’s basic free plan currently includes 500 texts, 200 minutes of voice calls, and 500 MB of data per month on one line. The carrier’s network relies on data connections for all communications. Unlike on traditional mobile networks that route voice calls and texts via separate networks, FreedomPOP treats all forms of communication as data. The carrier has almost 2 million subscribers, Stokols said.

With low data limits for most plans, customers rely more on connecting their phone via Wi-Fi. A typical FreedomPop customer relies on Wi-Fi to meet 85% of their data needs, Stokols said.

FreedomPOP’s move comes as the virtual mobile network carrier market is about to get more crowded. Cable giants Comcast (CMCSA) and Charter Communications (CHTR) have both said they will introduce wireless service later this year that will be in some ways similar to FreedomPop, relying on a mix of Wi-Fi connections and leased airwaves. The cable companies have agreements with Verizon for their mobile coverage. But neither is expected to compete at the low end of the market.