It only takes a minute...
As has been shown by all the recent UK campaigns to provide 'Free' Broadband, as part of a bundle of services,it's pretty easy to offer fixed price services for free.
The revenue and margin model is easy to calculate, because you know exactly what revenue you lose by offering it free.
For variable cost services it's harder (have you heard of an operator giving free mobile service in return for subscribing to a bunch of other services?).
But it's still not too difficult, mobile companies have been doing it with bundles (though you notionally pay for the bundle), and online email providers have been providing 'free' service for years.
The key is working out what the average usage of the free service will be. If I have a million subscribers, and I give them free calls (at least on-net), all the time, as much as they want, how much would they use it?
Certainly, I would get some subscribers making hundreds of calls per day, and being on the phone for say, 8 hours (perhaps more), but the vast majority of my users would not change their usage patterns significantly.
(hint: how much disk space/user does Google need to service the 2.75Gb gmail allocation?)
So, how much would it cost me? (answers on a postcard to 'Basic Economics', please!)
Perhaps the real irony here is that in the telco world it would cost them everything, because if you take away their ability to charge for call usage, you take away their 'raison d'etre'.
If they're not selling minutes, what are they selling..?
I have said for a long time that they really need to sit down and work out where their business goes, when the minutes go away.