Bouygues launches free Wi-Fi to challenge Free Mobile

France’s Bouygues Telecom is fighting Free Mobile’s fire with flames of its own. The carrier is working with virtual hotspot network Devicescape to give its smartphone customers seamless access to 8 million open Wi-Fi access points globally, replicating – at least fractionally – one of the key differentiators Iliad’s Free Mobile has on the competition: a 4 million-node offload network.

Devicescape doesn’t own its network. Instead it uses crowdsourcing software embedded in millions of customers’ smartphones to identify and test the quality of open hotspots around the world. It then forms a virtual network around those free access points, which Devicescape customers automatically link to when in range. Last month, Devicescape announced a deal with Intel (s intc) to add its virtual network capabilities to Intel-powered Ultrabooks and tablets.

Free Mobile and Bouygues’ Wi-Fi networks won’t have much overlap as they target different kinds of hotspots. Free’s network is built into the home broadband set-top boxes Iliad installs in residential customers’ homes. So its coverage is limited to areas where people live and is optimized primarily for indoor usage.

While Devicescape’s network does include some open residential access points, it also incorporates the free Wi-Fi offered by local governments, restaurants, coffee shops and retail businesses. If you’re in a public plaza, you’re probably much more likely to encounter a Devicescape connection than a Free Mobile connection. But Devicescape doesn’t have the sheer volume of nodes as Iliad. It offers 8 million hotspots, but only a fraction of them are in France (Devicescape doesn’t break down numbers by country). Bouygues customers, though, will have access to the full network when they leave France.

Since Free Mobile launched five months ago, it has shaken up the normally staid French mobile industry, setting off price wars with the big three carriers in France. In the first quarter, Free added 2.6 million customers – an unprecedented haul for a country the size of France – lured in by its ultra-cheap voice and data plans.

Free, however, may have some trouble keeping its revolution going. It’s leaning heavily of its competitor/network partner Orange(s fte) to supply 3G coverage in the large portions of France Free’s HSPA+ network doesn’t cover. For every customer Free steals from Orange, it winds up paying the carrier back in roaming fees.

Free’s hotspot network only went live in April so it has yet to make an impact on Iliad’s financial statements. We’ll have to wait to see if Free can truly use that huge resource to manage its data costs and whether operators like Orange and Bouygues can overcome that advantage with their own Wi-Fi services.