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Orange customers flee to Free Mobile’s new ultra-cheap plans

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Last month we reported on the wireless revolution Iliad’s Free Mobile was leading in France. Now the first casualty reports are in. France Telecom’s Orange(s fte) on Wednesday lost 201,000 net subscribers in a little more than a month, as waves of customers suspended their voice and data subscriptions and signed up for Free’s market-busting all-you-can-eat plans, Mobile Europe reported.

Those 201,000 lost subscribers may not seem like a lot, but keep in mind that European countries don’t grow operators quite as large as they do here in the States. With 27 million subscribers, Orange is smaller than even T-Mobile USA, which has 34 million customers. Orange saw more than 1 million overall terminations in the period, but those were offset by 837,000 new customers. So while Free is definitely having an impact, it’s not as if customers are shunning the major operators now that Free is on the scene.

Free uses its 5 million Wi-Fi access points located in customer homes as the backbone of its network. Wi-Fi is the secret to its low prices, and Free is using that advantage to the hilt, offering unlimited voice, SMS and data plans for a mere €2520 (U.S. $25.50) a month. When customers leave Wi-Fi coverage, they connect to HSPA networks built either by Free or by its roaming partner (which is, ironically, Orange). While on the cellular network, they face 3 GB monthly caps, but even with restricted use, Free’s data prices far undercut anything France’s three major operators are offering.

Free’s momentum may have slowed down considerably since its high-profile launch in January. Orange said that on the day following Free’s debut it received 150,000 number portability requests, i.e., customers moving their phone numbers over to other operators. That rate has since slowed down to 15,000 per day. Orange has also dropped its rates considerably, offering monthly voice and data plans below €10, but Free’s cheapest plan is an astonishing €2 a month.

Image of Eugene Delacroix painting courtesy of the Louvre.

7 Responses to “Orange customers flee to Free Mobile’s new ultra-cheap plans”

  1. The price is 19€ (15€ for DSL subscribers) for unlimited calls, SMS and internet or 2€ (0€ for DSL subs) for 60 minutes outbound calls + 60 SMS (inbound calls are free except when roaming, like everywhere else except the US…). FYI wifi roaming is not active currently, so free subscribers use standard HDSPA, either on free mobile network or more commonly on its national roaming partner network, Orange.

    • Kevin Fitchard

      Hi James,

      Sorry, that was a typo on my part. Changed in the story. Thanks for catching that.

      So Wi-Fi roaming isn’t active yet? How can they sustain those rates if there traffic is still primarily on the mobile network.

      • Well since their network covers around 30% of the population but seems mostly inactive currently, they end up paying a lot to Orange. I would say they have a cost leader strategy, driving down mobile costs while they protect fixed broadband revenues (where they have the highest ARPU of all operators). How long they can sustain this ? Good question. They have a lower cost structure than incumbents, with a strong DIY culture. For more on the business model see this article:

      • Kevin Fitchard

        Wow, I can’t even imagine them getting anywhere near breaking even if they’re paying Orange for 1 GB + per subscriber each month plus minutes. No roaming deal is that good. Thanks for the insight, James.