French ops tackle Free with no frills brands

Interested parties that aim to embrace the culture of Generation Z first need to embrace the use of new forms of communication that have developed on the expense of face-to-face interaction such as social networking, virtual interaction and crowd sourcing among others. French mobile operators have realized that and have joined the game with the launch of a series of no-frills plans targeting this segment.
 
The new plans present vast similarities and are offered under separate brands from the three operators’ main brands. This way, Orange, SFR and Bouygues Telecom differentiate the service positioning of the new offerings from that of their standard service. The new service model is made up of four key features namely the elimination of subsidies, self-service and online customer care, no-commitment contracts and low prices.
 
Such has the buzz been in the first few months following launch that Orange recently announced a 300,000 average weekly visits to its no-frills brand Sosh’s community pages, which assume the role of the customer service agent of a more conventional setting. By all means, this is a well-respected figure that makes Orange’s target for 500,000 subscriptions by end-2012 for its Sosh brand seem feasible.
 
Undoubtedly the launch might not have happened if Free Mobile was not in the plan. Iliad’s mobile unit won 3G frequencies in December 2009 and is now ready to debut in France’s mobile telephony space after receiving the green light from Arcep for achieving the minimum coverage requirements. Free Mobile’s motto for simplicity, clarity and transparency, reminiscent of the French revolution motto “liberté, égalité, fraternité”, is seen as a direct attack against the status quo that was established by the three mobile network operator’s (MNOs) main brands and the launch of the new, no-frills brands is their response to that.
 
The MNOs hinted that the economics of the new plans are similar to those of a normal package benefiting from lower overheads that allow them to offer reduced retail prices similar to those that have been rumored for Free Mobile ahead of its imminent launch. As such, the new plans allow MNOs to offer a better segmentation strategy and target a price sensitive postpaid segment with prepaid-alike tariffs. When circumstances change, brand loyal customers can pay the extra charge to migrate to the full service offer.
 
The popularization of these offers is expected to increase churn and lower subscriber acquisition costs for the three MNOs. The ball now is in Free Mobile’s court who will need to match, if not surpass, the discounts offered by the three brands to safeguard its reputation and meet the expectations of the public.
 
Panos Loukos is a senior analyst with Informa Telecoms & Media. For more information, please visit http://www.informatandm.com/section/home-page/
 

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