Stephen Stokols

IN THE MIDDLE OF LUNCH over sushi near his West Los Angeles office, Stephen Stokols’ phone buzzes with another e-mail, bringing a smile to his face. The founder and CEO of FreedomPop has just received another batch of smartphones, used ones, to arm his company in its wild plan to upend the mobile industry. “It’s like American Gangster,” he jokes. “We’re sucking up all the inventory.”

In his rapid-fire delivery Stokols sketches out his plan to take on the big telecom carriers by offering no-contract phones with a generous tier of service at no charge. It’s the opposite of the telecom industry, which spends big marketing dollars and hefty phone subsidies to lock people into expensive multi-year contracts. Stokols knows the business well; he used to be a senior executive at British Telecom.

Within the next few months FreedomPop will begin selling refurbished HTC HTCCY +% EVO 4G Android phones–and potentially Samsung and LG handsets–for $99 to $199, with no contract, and give away 500 megabytes of 4G data per month, plus unlimited texting and 200 anytime call minutes, as well as unlimited calls to other FreedomPop phones. FreedomPop plans to sell 2 or more gigabytes of data starting at $18 a month and an upgrade to unlimited calling for $10 a month. Compare that with a “Share Everything” Verizon iPhone plan that nicks you for $40 a month for unlimited voice and text plus $60 for 2 gigabytes of data. Thus, FreedomPop will charge $28 for what Verizon offers for $100. But the average American consumer uses about 200 minutes of voice and 500 megabytes of data per month, so the lower 50% of FreedomPop’s customers won’t be paying a dime. FreedomPop will also allow anyone with an existing Sprint Android phone that’s not in contract to sign up on its network at no cost.