With a new start-up planning to give away wireless data for free, wireless carriers may be in for a big wake-up call.
In its attempt to take on wireless giants like AT&T and Verizon , FreedomPop, a wireless internet provider, will provide 500MB of free data a month on a 4G wireless network via a portable modem that it gives users for a refundable deposit.
"Margins are sky high in the U.S., especially versus European companies in wireless data, and we are coming in and trying to disrupt that market," said Stephen Stokols, CEO of FreedomPop. "Consumers are getting pillaged. It's a $100 billion industry next year, and we're looking to really take a big chunk of it."
Basically, FreedomPop will work on a "freemium" model, allowing users to pay a refundable deposit for a modem that enables wireless access for a limited amount of data. There will be, however, paid plans available for users who want more data.
Stokols compared FreedomPop's business model to that of Skype, which is a free internet service that also sells premium services to its users.
"We expect a large majority of our userbase not to pay us a penny, but those who use more data, like business travelers, they will actually pay us," Stokols said Wednesday on CNBC's Squawk on the Street. "And we will sell services as well, value-added services consumers can use to enhance their user experience."
The modems come as cases that fit Apple's iPhone 4/4S and iPod touches and work as a wifi hotspot. FreedomPop has partnered with 4G Wimax and 4GLTE mobile broadband networks to provide wireless service.
As for the deposit for the modems, prices range from $49 to $89, Stokols said. But the deposits are fully refundable, he added.
"We're trying to eliminate as much friction in this as possible," he said. "Every American should have one of these devices."