Free Mobile promises 50% cut to French consumers' telecom costs

The French telecoms market is set to face an upheaval next year if Free Mobile goes ahead with its plans to launch inexpensive triple- and quad-play services. Free Mobile will offer its services that cut the cost of an Internet subscription and unlimited mobile plans by half.

The company, a subsidiary of the French broadband operator Iliad, is being positioned by Iliad's CEO, Xavier Niel, to offer unlimited calls, Internet access, messaging services and streaming TV for less than €50 per month when it launches at the start of next year. The pricing of similar packages available today from France Telecom Orange, SFR and Bouygues Telecom range from €90 to €106 per month for a 12-month contract.

Niel said the the typical cost of an Internet subscription and unlimited mobile plans for a family of four can run around €4,000 per year. "We announced that we would more than halve the price of such deals is what we'll do," Niel told ZDnet.

However, it would seem likely that Free Mobile will not be providing subsidised smartphones within this price package, unlike offers from the existing operators. The company declined to comment on its plans for subsidies.

Niel said incumbent operators to make profit margins of around 30 per cent, the highest in the world. Speaking on the Capital M6 TV channel, as reported by Zone-Numerique, Niel criticised the current mobile providers as charging €0.18 on average for a three-minute call--when the actual cost was a few cents.

"Today, when you buy a mobile plan [in France], over 30 per cent of the price you pay goes to the operator," said Niel, as reported by ZDnet. "Which companies in France have a 30 per cent margin? It doesn't exist. The supermarkets only make 1, 2 or 3 per cent profit."

Niel has already proved low-cost services can be profitable with the launch some years ago of his "Freebox" DSL and unlimited landline voice calling service. The CEO also has spoken in the past about the lack of competition in the French mobile market--a situation he now seems intent on changing.

Iliad was the only bidder for the fourth French 3G licence in 2009, and has since struck a 3G roaming deal with France Telecom Orange to provide Free Mobile with adequate coverage while the company builds out its own network.

For more:
- see this Zone-Numerique article (via Google translation)
- see this ZDnet article (via Google translation)
- see this Telecompaper article
- see this PCWorld article (via Google translation)

Related Articles:
Iliad talks down auction price of additional 3G frequencies
FT Orange inks €1bn roaming deal with rival Iliad
French government considers raising "triple play" service tax
One bid doesn't make an auction - the fourth French 3G licence

Article updated April 8 with comment from Free Mobile.

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