Illiad “Free” Disrupts French Mobile Market; Can it Work Elsewhere?

It is no mean feat for a new competitor to muscle its way into a market dominated by three large providers, or to do so quickly. To the consternation of France’s leading mobile service providers, that is what Illiad’s “Free Mobile” service has done.

In about six months, Free Mobile has garnered about 3.6 million customers, and has gotten
5.4 percent of France’s roughly 67 million mobile subscribers, in less than six months. One would expect the rate of growth of slow, but that’s a singular achievement.

Free Mobile now is the fourth-largest mobile service provider in the French market, after Orange, SFR and Bouygues Telecom. To be sure, Free Mobile still is about a third the size of
Bouygues Telecom, which has 11 million subscribers.

Almost by definition, what Free Mobile has achieved qualifies as a market disruption: Free Mobile has, in six months, altered the market dynamics of a business that has been relatively stable for quite some time.

As often is the case, Free Mobile chose to attack the market using a “same service, lower price” model, offering service plans of €2 per month, or a plan with mobile data service at €20 per month, that set off a price war in the French mobile market, the Wall Street Journal reports.


Free Mobile relies on a “bring your own device” or “buy your own device at full retail price” to offer lower-cost plans without contract, since it does not have to subsidize handsets. That approach isn’t new. Most smaller mobile mobile virtual network operators that lease capacity from other carriers also do so.

What is quite different is the dramatic and sudden market share Free Mobile has gained, essentially equalling the share held by all other French MVNOs, combined, in less than six months.

The issue, perhaps, is whether the Free Mobile approach is exportable to other mobile markets in developed countries. To be sure, Free Mobile is losing money on its mobile operation at the moment, and plans to plow effort into rapidly gaining more market share, before it turns its attention to profitability.

Wi-Fi might plahy a role. Free Mobile parent Illiad operates a fixed network business as well. And Illiad now has a “potential network” of about four million consumer Wi-Fi hotspots available to offload mobile data traffic.

The Wi-Fi hotspots are embedded in the “Freebox” Internet gateways of its DSL and fiber-to-the-home customers throughout France.  Up to this point, the “shared” Illiad Wi-Fi hotspot network has promised sharing of broadband access with other Iliad customers.

Now, Free Mobile customers with one of its standard plans will be able to configure their phones to automatically connect to any Wi-Fi hotspot in the Freebox community, gaining unlimited data access and VoIP calling. That could potentially help Free Mobile in the area of operating costs.

The issue, though, is whether it is possible to replicate Free Mobile’s approach in other developed markets. In the U.S.l market, Clearwire might have done so, but didn’t succeed.  Dish Network might try.

In the Spanish mobile market, where market leaders moved to a “no handset subsidy” approach, customer losses have compelled at least a momentary retreat back to the older pattern. At least so far, it appears the Free Mobile approach requires a consistent “no handset subsidies” approach, as well as a deep-rooted structuring of operating costs to compete at disruptive retail prices.


French mobile market share, late 2010