5 Comments

Summary:

When Free.fr launched its revolutionary new wireless service last week, it put French mobile operators on notice, and they have all responded. The problem is they’ve come nowhere near close to matching the deep data and voice discounts Free is offering.

Free Mobile has kicked of a French Revolution of its own  (source: The Louvre)

When Free.fr launched its revolutionary new wireless service last week, it put French mobile operators on notice, and they have all responded. Two of France’s Big 3, have already cut the prices on their budget-minded plans to compete with Free’s €20 ($25.50) monthly unlimited voice, SMS and data plans, while the third, Bouygues, plans similar price slashes this week, according to Reuters. The problem is none of those carriers have come close to matching the deep discounts on France’s normally pricey mobile services that Free is offering and they may never be able to.

As Om detailed in his in-depth profile of Free Mobile, Free isn’t operating like any typical carrier. It’s using its network of high-speed DSL connections to create a communal wireless network of sorts, splitting home Wi-Fi between public and private channels and then using that public portion to create the mother of all hotspot networks. The density of cities like Paris practically guarantee that any given mobile customer will be in range of one of these nano cells, allowing it offload mobile data very cheaply. As it incorporates femtocells into its set-top boxes, Free is doing the same for voice and SMS.

Filling in the gaps between Wi-Fi, Free has launched a 42 Mbps HSPA+ network. To prevent customers from tying up too much cellular capacity, Free has implemented a rather liberal 3 GB-per-month cap, but as long as you remain within Wi-Fi’s warm embrace, you’re data usage faces no restrictions.

Though France’s operators like many of their international peers make use of Wi-Fi, they don’t have a 5-million-access-point advantage of Free. For instance, France Telecom’s hotspot network consists of only 30,000 access points. Consequently their pricing responses haven’t even gotten close to matching Free’s plans.

France Telecom’s Orange has launched two plans for its Sosh SIM-card service (i.e. bring your own phone) that both undercut Free’s €20 plans, but neither delivers anything near unlimited. A €9.90 plan includes unlimited SMS, but only 120 voice minutes and bills data at a half-Euro per 20 minutes (though the plan will soon included unlimited Facebook and Twitter use). A €14.60 plans adds 1 GB of data usage to the plan, while a €24.90 stacks on unlimited calling. That’s essentially the same service that Free offers with only a third of the data bucket, and that’s before accounting for Free’s hotspot network, which adds a hefty data multiplier. Just for good measure, Free has also launched a basic service including 60 minutes of calling and 60 MBs of data for a mere €2 Euros a month.

Free isn’t just gunning for new customers by challenging the established carriers with aggressive pricing. Free is attempting to overturn the old order completely by offering prices the traditional carriers have no hopes of matching unless they fundamentally alter the way they build their networks and provision mobile service. Those operators seem to be treating Free as a bottom-of-the-market nuisance, and are challenging it only in the bring-your-own-SIM space that Free is currently targeting. That may be a big mistake. Not for the first time in France’s history, there’s a revolution in the making that could overturn the established order and see its effects ripple throughout the world – this one just happens to be focused on wireless.

Image of Eugene Delacroix painting courtesy of the Louvre

  1. As a long term subscriber to Free.fr’s unlimited triple play service — WIFI, Cable TV (~50 useful channels+) and Unlimited Fixed Line Phone service to 104 countries, including mobile cell phones in the US, I can attest to Free’s high quality service, and incredible low price at 29.99 Euros (~USD$39.00) per month.

    Free. fr is owned and operated by French listed company Iliad.fr which now has a 15 year track record of innovation in bringing better telecom products and services at much, much lower prices to French consumers. Free.fr has already a disrupted the telecom market in France; I can only hope they’ll foster similar innovation in the US and globally.

    In the mobile cell phone market in France, it’s too soon to tell with Free.fr’s revolutionary new, low cost service, though their prospects are good, since they are not a fringe player, and instead, a well established player with a solid reputation.

    Tim

    1. Thanks for commenting, Tim. I wrapped up my reply with my response to 186k below.

  2. I am all for innovation by mobile operators but I wouldn’t assume run away success for Free. WiFi is great for home and office but it can often be a very poor alternative to cellular when away from these locations. Free may have a large base of residential hotspots but the power limitations on WiFi in Europe mean the range is very low and despite the large number they’ll be many many gaps in coverage even in urban areas. When you’re out of your home and office, you just want coverage/capacity and don’t want to have to think about it. Cellular offers this and on the cellular front, Free has poor spectrum holdings. Free launched with 2x5MHz of 2.1GHz spectrum and a national roaming deal with SFR. They also managed to acquire 2x20MHz of 2.6GHz spectrum but missed out on the 800Mhz spectrum which was split between the three incumbents. France is a big country and rolling out at 2.1 and 2.6 beyond the urban areas will be prohibitive and hence Free will be dependent on costly roaming with SFR for the foreseeable future

    Free’s mobile launch is bold and ambitious but I suspect they will struggle with capacity issues and their financial returns could be poor and hence I am less sure that they herald a brave new future for mobile

    1. Hi 186K, Tim,

      Sorry for the late response. Thanks for putting a little perspective on the post. You’re both right. There’s no guarantee of success for Free.fr’s plan. I did let my excitement get the better of me, perhaps. :) From a U.S. perspective it’s just very exciting to see such a radical new business model emerge in telecom, one with real scale, rather than a small MVNO. It’s going to be very interesting to watch Free over the next few months to say the least.

      So what are predictions? Do you think this huge carrier-switching surge will die down? Do you think Free can maintain these price levels? Do you think capacity and coverage issues will get the better of them, causing disgruntled customers to switch back to the 3 incumbents?

      Would love your thoughts!

  3. Kevin I don’t think your article was over-excited at all, I think it has just about the right amount of excitement for a potentially game-changing development.

    Consumers are not brand loyal when it comes to mobile and internet service providers. They’ll jump ship as soon as a better deal comes along – and happily. This is especially true in the US, where the phone companies have been unscrupulously gouging consumers for decades.

    And though the danger of spotty coverage in rural areas is a real problem for free, it’s not a showstopper considering most of the market is in concentrated urban areas – and the incumbent providers have never been exactly magnanimous with their rural coverage.

Comments have been disabled for this post