In January, the French ISP Free launched France's fourth mobile phone network and an offering called Free Mobile -- hailed by many as a revolutionary wireless service, offering prices that other operators will not likely be able to beat.
Many companies already compete in the French mobile market. Three network operators -- Orange France , SFR , and Bouygues Telecom -- offer 2G and 3G services, and more than 30 mobile virtual network operators piggyback on the three physical networks.
But according to Xavier Niel, founder of Iliad, Free’s parent company, this was not enough to ensure fair prices for French consumers. People in France are fed up with “being ripped off with the highest prices in Europe, and things should change,” he says. “Today is the day of your freedom and the end of the yoke in which you have been locked up these last years.”
Since 2008, Free has been promising to halve the price of mobile communications -- a threat that traditional operators did not take seriously until now.
Its basic mobile phone service includes 60 minutes of outbound calls and 60 outbound text messages -- all free for the ISP's 4.8 million broadband customers. Everyone else pays €2 ($2.60) per month. Additional outbound minutes will cost €0.05 ($0.06), and additional text messages cost €0.01 ($0.01). Incoming calls and text messages are free, as they are on most mobile networks outside the US, Canada, and China.
Other offers includes an “unlimited” plan for €20 ($26) per month (€16 or $21 for broadband customers) that includes unlimited text messages and calls to fixed-line numbers in Europe and the US. 3G Internet use will be throttled above 3GB of data per month -- a fairly typical limitation that most customers should be content with.
Unlike most of the other French mobile operators, Free won’t charge its customers to end their contract at any time, as long as they pay for the phone.
The major French telecom operators have started planning strategies to compete with Free’s unlimited voice, SMS, and data plans. But analysts say none of those carriers will likely come close to matching the deep discounts Free is offering on France’s normally pricey mobile services -- and they may never be able to do so.
Free has many advantages over its competitors. As Om Malik detailed last month on GigaOM, each of Free’s more than 5 million Internet broadband subscribers has a set-top box that includes a broadband modem and a WiFi router that automatically connects the user to a WiFi cloud with more than 5 million users -- a cheaper alternative to 3G.
Those 5 million access points will make the difference for Free. Its biggest competitor, France Telecom, has only 30,000 access points.
Even though Free has not published an official figure, it has been reported that the company has been gaining 100,000 to 150,000 subscribers a day. One estimate says it has received 2.3 million subscription requests in less than a month.
According to a Jan. 30 article on Light Reading, “mobile operators have been contending with an exceptional increase in portability requests, following the launch of Free Mobile’s services.”
No doubt Free is winning the price war in France, but its viability will depend mostly on the reliability of its services. The next few months will determine whether it will live up to its name and set an example across Europe with its low-cost business model.
— Hospice Houngbo is a former Fulbright scholar/researcher and a former graduate student of IT at the Rochester Institute of Technology. He is currently a PhD student in computer science at the University of Western Ontario.