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France Tel 'Competes' With Free By Raising Rates
Tightens The Noose After Free Pricing Disrupts Market
by Karl Bode 12:31PM Thursday Feb 16 2012
Last month we noted how French ISP Iliad was shaking up the French wireless market with some creative pricing, which included an introductory basic free tier of service (an idea that's taking root in the States now). With the offering clearly popular among users tired of paying an arm and a leg to France's uncompetitive incumbents, France Telecom is now claiming the new service is straining their network, so they'll of course have to renegotiate the deal they made with Free (read: raise rates so Free's business model becomes untenable):
quote:
France Telecom said its network was being stressed by a rapid growth in traffic brought on by its hosting of new mobile entrant Iliad and vowed to protect its clients from service interruptions, its CEO told magazine Le Point...Iliad's Free Mobile service upended the French telecom market in January when it launched its main offer at 19.99 euros per month for unlimited calls to France and most of Europe and the United States, unlimited texts, and 3 gigabytes of mobile data.
This is the same France Telecom that absolutely refused to compete on price when Free entered the market, claiming their competitive pricing would be "bad for network quality and innovation." According to the incumbent CEO, they didn't need to compete on price because "we offer security, reliability and innovation." Just not on pricing. France Telecom negotiated a contract and did their homework, but with Free succeeding more than they expected -- it's time to change the terms and raise rates.

Whether it's AT&T claiming congestion to justify DSL caps and $10 wireless overages, or Canadian ISPs claiming congestion to justify predatory usage-based pricing, you do start to notice a trend wherein congestion is used by incumbents as a bogeyman to justify everything from massive overages to anti-competitive behavior. The best part about the congestion bogeyman is that telcos never have to provide actual data evidence of congestion -- and the press never bothers to ask for any.

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vpoko
Premium
join:2003-07-03
Boston, MA

Impossible

It will always be impossible for virtual carriers to compete for exactly this reason. Unless requiring wholesale, with price controls, is added as a condition for getting a spectrum license, the carriers that own the spectrum will be able to crush any competition that doesn't have its own.

Simba7
I Void Warranties

join:2003-03-24
Billings, MT

Figures

Yep.. Someone's getting jealous and loosing customers.

Of course, Iliad could sue France Telecom for breach of contract.

vpoko
Premium
join:2003-07-03
Boston, MA

Re: Figures

I'd bet France Telecom made the contract favorable enough for themselves that they're not in breach of it.

Simba7
I Void Warranties

join:2003-03-24
Billings, MT

Re: Figures

I wouldn't doubt it. It's the typical sneaky crap most Telco's do.

vpoko
Premium
join:2003-07-03
Boston, MA

Re: Figures

It probably wasn't sneaky, per se, since I'm sure Iliad had attorneys and knew what they were signing, but they wouldn't be exactly negotiating from a position of strength. I'm sure they had to take whatever deal France Telecom was willing to give them.
FloridaBoy

join:2009-06-22
Bradenton, FL
Since the French Government owns about 25 to 30 percent of France Telecom, I don't know if that would work out well for them.

Mike
Premium,Mod
join:2000-09-17
Pittsburgh, PA
kudos:1

laissez faire

So how is that whole laissez faire thing working out for you guys?
BiggA

join:2005-11-23
EARTH

It costs money

Yes, the big carriers screw you over so many ways, but let's not forget it takes a lot of capital to build out a good network, and Free is basically mooching off of the established networks with their roaming agreement.

mackey
Premium
join:2007-08-20
kudos:8

Re: It costs money

Free is NOT mooching off of the established networks. Free offered to PAY the established networks for use of said networks and those networks AGREED to the terms. Perhaps Free is able to be cheaper then the owner of the networks because they found out how to have cheaper/limited end user tech support. Perhaps they decided they didn't need retail stores. It's not mooching if you're only paying for what you're actually using.

/M
BiggA

join:2005-11-23
EARTH

Re: It costs money

It sounds like there are government regulated roaming deals in France, like Sprint has on Verizon. If it is a 100% voluntary agreement, then they aren't mooching, they are legitimately buying. Sprint isn't. They are mooching.
bbdhomer

join:2011-02-02
Scarborough, ON

BOGEYMAN!

hahahahaha I LOVE IT, congestion bogeyman!!!!!!!!! I am stealing this word!!!!

Harddrive
Proud American and Infidel since 1968.
Premium
join:2000-09-20
DFW
kudos:2

France Telecom

Le Stupid.