Free Mobile strategy comes under fire

Iliad’s French mobile operation, Free Mobile, has come under fire from rival France Telecom Orange. The operator, which has a roaming agreement with Free, has raised concerns that the Free network is not as technically capable as it should be, and as a result is placing too much strain on France Telecom’s network.

France Telecom’s CEO, Stéphane Richard, reportedly insisted that his company would not prop up Free’s mobile network at the expense of its own, amid claims from insiders that France Telecom was providing more than 95% of Free’s network coverage. Free’s license was awarded on the basis that its network covered 27% of the French population, with the remainder covered in a roaming agreement with France Telecom.

There have been varying claims as to how well the France Telecom service was coping with demand from Free’s customers, with some sources stating that the France Telecom network was being overwhelmed.

There may, however, be an ulterior motive for any negative comments. Free Mobile, since launching last month, has undercut its competition, providing cheaper tariffs that are attracting customers from France’s other operators; France Telecom Orange, Vivendi’s SFR, and Bouygues Telecom. It is estimated that up to two million people have switched to Free so far, and competitors have been forced to cut their prices and invest in more marketing.

France Telecom is at least set to gain more than its other rivals from Free’s emergence due to the roaming agreement. But a large proportion of its overall profits come from the French mobile market, which is being squeezed in the price war with Free.

Free has also faced recent criticism from MVNO group, Alternative Mobile, which said that the operator was advertising end user tariffs that are actually cheaper than wholesale rates. The group also called on regulator Arcep to intervene in the belief that Free had failed to live up to its 3G license terms.

Arcep’s chairman Jean-Ludovic Silicani detailed the coverage obligations that Free must comply with on Friday, in a meeting with France Telecom’s president Sébastien Crozier. Silicani also stressed the distinction between the coverage obligations which are monitored by Arcep, and the terms and conditions contained in the roaming agreement between Free and France Telecom.

Until Free’s launch, the big three incumbent operators in France between them held over 90% of the country’s mobile market share. France had approximately 58 million mobile subscribers in September 2011 and a mobile penetration of 92.6%.

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