French operators unveil new tariff packages ahead of innovative market entrant launch - Wireless Intelligence looks at possible outcomes of Free Mobile’s entry into the French mobile market

The launch of Iliad’s Free Mobile in France, planned for early 2012, is stimulating new tariff models from existing mobile operators, according to GSMA Intelligence analysis. All three French mobile operators – FT-Orange, SFR and Bouygues Telecom – recently launched a number of new offers and tariffs aimed at retention of existing contract customers, increasing brand awareness and reaching new lower-tier consumer segments in anticipation of Iliad’s expected innovative mobile tariffs.

Iliad has not yet unveiled its upcoming mobile proposition, but competitors and consumers are expecting the new entrant to drive changes in mobile pricing in the same way it changed the fixed broadband market almost a decade ago. Over the first half of 2011, Iliad gained 36 percent market share of the country’s broadband net additions, of which 80 percent were new subscribers opting for its new offer branded “Freebox Revolution”. Unveiled in late 2010, this service is priced at EUR29 per month and boasts broadband access (via FTTH, ADSL, Wifi) as well as digital TV, HD gaming and a fixed phone line which includes unlimited calls to mobile phones on any domestic networks. Its set top box is equipped with a Blu-ray reader, HD game console, 250GB hard drive and access to its application store branded “Freestore”. In addition, Freebox Revolution is offered contract-free, and utilises Universal Plug & Play (UPnP) aimed at significantly improving user experience.

In December last year, Iliad stated that its 2012 mobile offer will be based “on the same will that fuelled its 2002 broadband offer and its Freebox launch: to innovate and push revolutionary offers at very low prices”. This month, Maxime Lombardini – Iliad’s CEO – claimed that Free Mobile will present “a simple offer, [which is] affordable and one that will give subscribers complete freedom”. Moreover, the company stated that France is “a changing market offering opportunities for a new entrant” and that it will look to replicate its fixed broadband success: high adoption without compromising margins. By this yardstick, Free Mobile will focus on lower subsidies through SIM-only offers and online subscription, as well as more affordable smartphones.

Aware of this move, incumbent operator FT-Orange has unveiled a new offer - branded “Sosh” – which the company describes as a “100% digital mobile brand aimed at ultra-connected 18-35s: offering attractive online prices and without any commitment required”. Sosh will be launched in October 2011 and aims to attract 500,000 users by the end of 2012. The new brand includes access to data services (including VoIP) from 500MB to 1GB per month and starts at EUR19. Initially, Sosh is a SIM-only offer, yet users can buy a new handset and choose to pay for it up-front or over a 12 to 24 month period.

Similarly, Bouygues Telecom has launched a SIM-only offer – branded “B&YOU” – also aimed at the “emerging Internet generation”. Aligned with Orange’s Sosh offer, B&YOU aims to create value from data traffic with no handset subsidies, no contract commitment and data services from 500MB to 1GB starting at EUR24 per month.

Meanwhile, Vivendi’s SFR has been expanding its distribution channels (mainly via new MVNO agreements), launching new mobile offers and competing head to head with Iliad’s multi-play bundles. SFR’s Neufbox Evolution offer (also launched in December 2010) boasts similar hardware capabilities to Iliad’s Freebox Revolution - including UPnP and unlimited calls to mobile - and is contract-free and priced at EUR32 per month. In parallel, SFR is offering its “Multi-pack” option which bundles a mobile phone line with its set top box at a discounted rate – a tactic that Free Mobile will certainly explore to migrate its 4.7 million broadband users onto its mobile network. SFR has also redesigned its customer loyalty programme and launched last June its “Formules Carrées” offers, lowering prices further for subscribers who renew their contracts. Its “Formule Carré Bloqué” is priced at EUR11 per month with 200MB of data allowance.

These lower price offers are in line with the upcoming “social mobile tariff” that was agreed between the Government and mobile operators last March and which should be launched before year end. This contract-free tariff – publicly advertised as being endorsed by the Government – is targeted at the lower income consumer segment. It will be capped at EUR10 per month and will include 40 minutes of voice, 40 text messages and will be blocked as soon as the monthly bill hits EUR15. Reportedly, a similar initiative is also being considered for fixed broadband offers in the near future.

Joss Gillet, Senior Analyst, GSMA Intelligence:

The planned launch of Free Mobile in early 2012, with an (as yet undefined) innovative mobile data tariff plan, is expected to act as a further catalyst for tariff reviews by current operators in the French market. This may include “unlimited” data usage in a market where operators are considering the introduction of tiered data tariffs. However, it seems unlikely to trigger sharp declines in mobile tariffs. GSMA Intelligence expects that Iliad’s Free Mobile will capture just 5 percent of the French mobile market within three years of commercial launch. Behind this forecast is the fact that, historically, effective price per minute (EPPM) quarterly growth in Western European markets has typically remained in the range of +/- 3 percent during the first ten months following either market consolidation or new network launches, reducing the likelihood of a retail price war between operators. But the introduction of this fourth market player may stimulate more SIM-only offers, lower handset subsidies, new data tariffs and multi-play bundled offers.

Cellular market share
Source: GSMA Intelligence forecasts