Just a few months after having its credentials for participation in the FCC’s low-income Lifeline program revoked, FreedomPop has found a new Lifeline-related revenue stream: The company is licensing a database system originally developed for its own use to service providers approved to offer Lifeline service. In an interview with Telecompetitor, FreedomPop CEO Steve Stokols said the FreedomPop Lifeline database took about a year to develop and offers fraud prevention capabilities, as well as providing leads for service providers pursuing Lifeline business.
FreedomPop is best known as a provider of a free mobile service offering launched several years ago. Traditionally, the company has made money by selling upgrades to premium offerings that have higher limits on voice, text and data usage.
Customers must have a credit card to use FreedomPop’s free offering – a requirement that puts the offering out of the reach of a typical Lifeline participant, according to Stokols. To participate in Lifeline, customers traditionally have been required to be approved for participation in government aid programs such as the Supplemental Nutrition Assistance Program, and people meeting those qualifications typically don’t have credit cards, he said.
Interestingly, however, FreedomPop’s digital customer recruitment policies have yielded a target base of 2.5 million people who are ineligible for the free offering, but who might qualify for Lifeline – a reality that caused FreedomPop to look into what would be required to participate in the program.
This was occurring just as the FCC, under the administration of former Chairman Tom Wheeler, was reforming the Lifeline program last year to cover broadband as well as voice services. As part of those reforms, the commission also made two other changes: It shifted responsibility for approving service providers for participation in the Lifeline program to the FCC from the states and it established plans for a verification database of households eligible for participation in the program, which is designed to pay a portion of a household’s monthly broadband and/or voice bill.
According to Stokols, Wheeler encouraged FreedomPop to participate in the Lifeline program, which is what drove the company to develop a system that essentially provides the functionality that the FCC verification database was intended to provide. Development took about a year and a “seven-figure” dollar investment, Stokols said.
Current FCC Chairman Ajit Pai has different views on Lifeline than his predecessor, however. Pai didn’t support last year’s Lifeline reforms, and one of his first moves as chairman was to reject nine Lifeline service provider approvals made at the federal level under Wheeler’s chairmanship – including FreedomPop’s.
Subsequently, Pai shifted responsibility for Lifeline service provider approvals back to the states. As a result, according to Stokols, “the approval process is basically shut down.” Stokols estimated that it would take five years and a lot of legal fees to get Lifeline approvals on a state-by-state basis.
Meanwhile, development of the FCC’s Lifeline verification database is taking longer than some carriers would like, a reality that caused at least one carrier — AT&T — to restrict its participation in the program to markets where the company is required to participate.
FreedomPop Lifeline Database
In making the FreedomPop Lifeline database available for use by those service providers that already have Lifeline approval, FreedomPop essentially has made lemonade out of lemons.
According to Stokols, the database provides the fraud-screening capability that was an important factor in the FCC’s initial decision to create an eligibility database. In addition, he noted that the database will enable Lifeline service providers to “reach huge parts of the population” that the providers can’t reach using traditional Lifeline enrollment tactics based on street teams.
As Stokols put it, “It became clear that we could have a bigger impact by giving our technology to the existing market.”