In offering an all-you-can-eat mobile phone package for 19.99 euros a month, Internet firm Free is pulling the rug from under Europe’s second-biggest mobile phone market.
French telephone and Internet provider Free has started a price war with an aggressively cheap mobile phone offer that promises to shake up the country’s restricted – and expensive – mobile market.
French mobile phone market
On Tuesday Xavier Niel, CEO of Free’s parent company Iliad, announced a new tariff of just 19.99 euros a month for unlimited mobile calls, international landline calls, text messages and Internet (capped at a huge 3 gigabytes).
Free is also offering an even cheaper deal, giving customers 60 minutes talk time and 60 text messages for 2 euros a month.
None of the offers are time-bound contracts in a country where signing 24 months has been the norm, until now.
Free already has some 4.6 million using the firm’s landline, Internet and television package which itself shook up the market when it was launched in 2002 and set 29 euros as the Industry standard for the triple offer.
Free’s D-Day assault
In an Apple-style launch ceremony in Paris on Tuesday complete with cheering fans, Niel told the French public that “Free believes that up until now you have been used as cash cows. We will give the [other operators] a lesson.”
Free did not invest in a costly advertising campaign, and by taking a lead from Apple’s Steve Jobs, the run-up to the much anticipated announcement was awash with rumour and false leads.
A week before the announcement, Niel wrote on Twitter “Les sanglots longs des violons de l'automne bercent mon cœur d'une langueur monotone” - a poetic announcement best known in France as the radio call for the Resistance to mobilise ahead of the 1944 D-Day landings.
And Niel has certainly started a fight. His offer undercuts anything offered by Free’s three main rivals: France Telecom which operates the Orange network, SFR and Bouygues, who have until now enjoyed a virtual monopoly of the French mobile phone market, worth 21 billion euros.
A similar offer from Orange costs 78 euros a month, going up to 85 euros with SFR.
French mobile users have been “squeezed like lemons” Niel said on Tuesday, adding that “if you don’t go over to Free, it’s because you are [as stupid as] pigeons.”
First salvoes of a counterattack
Although the announcement was not unexpected – Niel has been promising to shake up France’s notoriously expensive mobile phone market for years – Orange, SFR and Bouygues have been put on the back foot by an offer many industry insiders believe cannot hope to be profitable.
SFR’s Marketing Director Patrick Asdaghi told FRANCE 24 on Wednesday: “Free is entering what is already a highly competitive market and Niel did not mention anything about network infrastructure or service, an area where SFR leads.”
Asdaghi said his company would not be coerced into sharply reducing its prices. “We have a different strategy, based on providing the best service and developing the most comprehensive nationwide wireless, 3G and 3G+ [even faster mobile Internet] in France,” he said, pointing out that the new mobile operator does not have its own network.
Meanwhile, French business daily Les Echos said Orange CEO Stephane Richard had spoken out in “solidarity” with his employees after shop workers were insulted by customers demanding lower monthly plans in the wake of Free’s new offering.
Richard admitted that Orange has prepared to re-evaluate its offerings and that major announcements were imminent.
“Our willingness to re-align ourselves to the market makes this an exciting time,” he told employees in a statement.
SFR also said that it would also be modifying its mobile packages in the coming days.
“But customers must remember that a mobile phone service is just that,” Frank Cadoret, head of SFR’s consumer division, told Les Echos. “It is not just about price, it is also about quality of service and quality of network. There is nothing in Free’s offer that is in any way innovative in terms of service.”
Date created : 2012-01-11