Possible Free Mobile Tariffs and their Impact on the French Telecom Scene

14 Sep

Fr_dp The French tech internet is abuzz with rumours that Free's upcoming mobile tariffs have been unveiled (apparently by some UBS analyst?) as stated here. I don't normally post on the basis of unconfirmed information, but while very aggressive, these tariffs don't necessarly seem impossible to me (and furthermore are probably the only positioning that Free could adopt). 

What is known about the tariffs: 

  • an entry level 5.99€/m voice and text only offer for 2 hours of communications, (presumably) unlimited text messages and unlimited calls to wireless and (presumably) wireline Free numbers
  • a mid-level offer at 9.99€/m for 5 hours voice, text and data offer for 5 hours of communications, (presumably) unlimited text messages and unlimited calls to wireless and (presumably) wireline Free numbers and 2GB of data
  • a top-tier offer at 29.99€/m for unlimited data, text and voice to all French lines (wireline and wireless) as well as US and Canada. Free broadband customers would get a 10€ rebate on that one. 

These offers will be "naked", ie. sold without a mobile phone.

As stated above, the tariffs are very aggressive, but not necessarily unrealistic. As expected, Free would completely take the bottom out of the text messaging market (it's surprising that the prices of such a low-cost product could have remained that high for so long, really… Would these rumours of collusion have any truth to them?) Thay would also come in with an entry level pricing for their basic offer that is about 4 times below the current market conditions (albeit without a subsidised phone).

The current ARPU for mobile in France is 29€/m. If these tariffs are confirmed, I can see the executives at the three major mobile phone companies (Orange, SFR and Bouygues Telecom) panicking right now. If confirmed, the market is up for a massive shake-up as customers start believing that they've been gouged for years. Indeed, if Free can make money on such cheap subs, how come the others are charging 2-3 times more ?

The reality, of course, is much more complex: businesses with low competitive pressure tend to be lax when it comes to making their cost-base efficient, and the triad of French operators don't feel their prices are unreasonable because their cost-base is indeed high. Since all three wanted to preserve margins as much as possible, they carefully avoided getting into price wars. Free will no longer give them that quiet option. 

I expect in the coming weeks to hear various high-level execs and union representatives explain to the press and the politicians how Free is going to create mayhem in employment as a consequence of their pricing (should it be confirmed…)

The cynical part of me believes that we're in for a new wave of France Telecom suicides. I sure hope that's not the case, but the underlying cause (excessive cost base and inhumane managerial culture) is still the same…

2 Responses to “Possible Free Mobile Tariffs and their Impact on the French Telecom Scene”

  1. Conovor September 15, 2011 at 7:55 pm #

    this rumor is originaly from the web site AndroidWorld, that published this information in July. This web site is not famous for it’s information.

  2. broadband blogger April 13, 2012 at 9:28 am #

    Thanks for the information, good details you got here, 80% of our population used mobile phones..

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