Orange purple with rage as Free throws French LTE market into turmoil...
Dec 5, 2013
They detest the arriviste company for destroying the cosy status quo ante that allowed them to rest fatly on ill-earned laurels whilst milking the market for all it was worth. They'll be even more apoplectic now that Free is introducing cut-price LTE.
Having proven themselves capable of doing little (other than to moan, winge and mutter about how "unfair" it all is) to counter Free Mobile's in-your-face determination to take the French 2G and 3G mobile market by the scruff of the neck and shake it around like a bedraggled rat, Bouyges, Orange and Vivendi-owned SFR had latched onto Free's perceived lateness in coming to market with a so-called "4G" offering and were making much of the matter.
Indeed the spin-doctors were out in force, briefing against Free and speculating that the company might be no more than a flash-in-the-pan given that it seemed incapable of providing an LTE service.
They will be a lot quieter now for not only is Free introducing a wide-ranging and expandable LTE offering, it is doing so for the price of its existing contract-free monthly mobile tariff of €19.99 a month that, henceforth, will include 20 gigabytes of data.
The incumbents have been wrong-footed again and are livid. All three of them were expecting to be able to raise their prices for 4G services in an effort to claw back some of the revenues and profits they had lost to Free.
Since it burst onto the French market in January 2012, Free's aggressive competition drove down tariffs by 12 per cent in its first year of operation and by a further 10 per cent so far this year. The incumbents had no coherent plan to counter Free's assault on their expensive services and no choice other than to cut their own prices or go to the wall.
And now they won't be able to over-charge for LTE either - though Orange seems to have a death wish and is insisting that it will raise its LTE tariffs in February regardless of whatever happens. However, Orange is even more exercised and angry by Free's disruptive LTE plans because Free currently piggy-backs much of its 3G services on the Orange network
Nonetheless, Free has carved-out a 10 per cent national market share for itself in under two years and seems set to take yet more as the incumbents flounder and fulminate.
Just look at the difference between Free's under €20 offering and what the incumbents are charging. SFR's cheapest LTE package is €42.99 a month for just three gigabytes of data, Bouygues's least expensive and considerably less-comprehensive plan is €29.99 (also for 3 Gigs)
It is evident that SFRs pricing model is simply unsustainable in the face of Free's attack whilst Orange and Bouyges, despite the bluster, are going to have to trim their prices, sharpish.
The incumbents were taking Free to task for being slow in deploying its 4G network and were insinuating that the company has neither the money nor the ability to provide nationwide LTE services.
Iliad, Free's parent company, points out that it has been and still is steadily building out its own 3G and 4G network using Nokia NSN equipment that can run both mobile technologies simultaneously. As of December 1, Free had 700 antennas capable of providing 4G services. Bouyges had 4,665, Orange has 3,439 and SFR (the most expensive 4G provider) had 718 - a further indication that its LTE expectations are rather greater than its current ability to deliver them.
Free does not provide subsidised handsets and its rivals are attacking the company in the run-up to Christmas and the New Year by advertising discounts on top-end handsets such as Samsung and iPhone models. However, whether or not this will prove to be sufficient blandishment when weighed against Free's much cheaper LTE offering remains to be seen. Many French and other European telecoms analysts are of the opinion that it won't.
Meanwhile Orange remains defiant. Delphine Ernotte, head of Orange France says,"We are not afraid of an offer that is backed with no network. Coverage and quality are fundamental. We will revamp our tariffs in February, as planned, and the prices on 4G will increase."
There's a line in the sand then. Orange had been expecting to ramp-up its tariffs for 4G services by €10 a month per subscriber. Will that now happen? Well, remember comet Ison? Only bits of it survived last week's close encounter with the sun. Orange is equally unlikely to retain its present shape and orbit if it thinks it can increase prices when others reduce them - and they will.
Since Free's announcement Orange shares are down 3.4 per cent, Bouygues down by 3.1 per cent and SFR down 2.1 per cent.
(see today's - ...Meanwhile 3 in the UK rolls out LTE at no extra charge to a deafening silence )