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

Google Tweaks its "Build by Demand" Algorithm

Google has a famously "data driven" culture, so it was not terribly surprising that Google is using a "build by demand" approach to its construction effort. Basically, Google has residents "voting" for Google Fiber by pre-registering and making a payment of $10. 

Each of of the potential "fiberhoods" then has a minimum threshold of pre-registrations that qualify the fiberhood for construction. 

Google has had to create different thresholds for different fiberhoods, and now has tweaked the algorithm just a bit to account for some inaccuracies in the databases Google built from a variety of sources about the actual number of potential residences in a fiberhood. 

So Google now adjusts the "potential homes passed" part of the algorithm to deduct vacant lots, abandoned homes and also adjust for large apartment buildings, as distinct from single-family homes.

The changes slightly affect 73 fiberhoods, boosting the percentage of sign-ups in some of the fiberhoods and therefore slightly increasing the likelihood that some fiberhoods will qualify for actual construction. 

Some 40 out of 74 fiberhoods now qualify. In Kansas City, Missouri while  75 out of 128 fiberhoods have now reached their goals as well. 

"Not Much Happening" in U.S. Broadband? Really?

The National Broadband Plan, which was released two years ago, says that there should be a minimum level of service of at least 4Mbps for all Americans. "Since then, not much has happened," some would say. 

But the Federal Communications Commission says "we found that the average speed tier that consumers were  subscribing to increased from 11.1 Megabits per second (Mbps) to 14.3 Mbps, an almost 30 percent  increase in just one year," in its Measuring Broadband America report. "The actual increase in experienced speeds by consumers was even greater than advertised speed, from 10.6 Mbps to 14.6 Mbps, representing an almost 38 percent improvement over the one year period."

You can make your own assessments of whether anything has happened in the last two years. 

FCC Might Limit Spectrum Holdings to Regulate Competition

The Federal Communications Commission could overhaul the way it measures competition in the wireless industry, The Hill's Hillicon Valley reports. Those measures could include both quantitative limits (total amount of spectrum) as well as qualitative standards (how much of the "best" spectrum any single carrier owns or controls). 

According to the report, FCC Chairman Julius Genachowski plans to circulate an order with the other commissioners next week that would launch a review of the FCC's rules for analyzing whether any one company has accumulated too much spectrum. 

The commission is expected to vote on the proposal at its September 2012 meeting. 

T-Mobile USA, for example, has argued that the current method, which is quantitative, does not account for qualitative differences, such as ability of lower-frequency signals to penetrate walls, for example. 

"The present screen is inadequate as applied to the current wireless  market, particularly because it fails to recognize the vast difference in value between low (below 1GHz) and high (above 1 GHz) frequency bands, T-Mobile USA has argued. 

The Point is to "Be Good," not to "Feel Good"

There is a genuine difference between "being good," or "doing good," and "feeling good." Too often, we opt for the latter, instead of insisting on the former. Consider all-electric cars, something that makes us feel good and virtuous. 

There is a scientific argument to be made, though, that when electricity is generated by coal-fired plants, such vehicles do not actually make a positive contribution to carbon emissions. But it makes people feel good, even when they are not, objectively speaking, "doing good." 

Even when electricity is generated in some other lower carbon way, such as from windmills, there is no such thing as a moral free lunch. Wind farms kill birds and golden eagles. Perhaps that does not cause many qualms. But if not, neither will accidental killing of dolphins when fishing for tuna. 

The specific energy of gasoline — measured in kWh per kg, for instance — is about 400 times higher than that of a lead-acid battery, and about 200 times better than the Lithium-ion battery in the Chevrolet Volt. We should not expect batteries to rival the energy density delivered by our beloved fossil fuels — ever, many correctly would note. 

The point is simply that the important matter is to do good, not just feel good. If you want to lower carbon footprint, then lower it, objectively. Don't posture. Don't substitute "feeling good" for "doing good."

Why One-Sided or Incomplete Thinking is Necessary, and Eventually has to be Corrected

Generally speaking, executing on a strategy takes focus and concentration on a small number of things. Just as certainly, all businesses exist in environments that are complicated. So ultimately, even concentrating on "just one thing," or "just a few things," will eventually prove to be necessary but insufficient. 

Compared to the situation of perhaps four years ago, the telco strategic context needs to be considered in a broader or different context, according to  STL Partners. That is to be expected. Even a "big new idea" necessarily is incomplete as a prescription for organization success. 

So where the key point was the idea of "two-sided business models," STL now says that is something that has to be kept in context. Of course. That was true four years ago, as well. But organizations and people can only focus on so much at one time. So the unchanging requirement is to focus on a few things at a time, even if that is objectively "unbalanced" and "incomplete."

Have Tablets Overtaken Smart Phones as the Device with Star Power?

The Apple iPhone now drives revenue at Apple. But the iPad now seems to have become the product with more appeal.

While both tablet and phone historically enjoy good scores on YouGov's U.K. "BrandIndex," a measure of public's perception of well-known brands, the iPad now might have reached an inflection point.

On a couple of measures, the iPad now gets more attention than the iPhone, YouGov says. That suggests the point just about has been reached when the revenue contribution from the iPad could start to drive more of Apple's overall revenue success.