This week saw the launch of what could be seen as a revolutionary cell phone service in France. Contingent on a couple of rules, Free.fr is offering an all-but-free cell phone service that promises truly unlimited data, voice, and SMS monthly tariffs. At the very least, the disruptive innovation is seen likely to kick off a price war with existing carriers, which is good for consumers. But recent news developments suggest Americans shouldn't hold their breath for the same sort of innovation any time soon—the existing carriers would strangle it.
Free.fr is an established broadband provider in France, but it's got expansionist plans that leverage its network to produce a wholly new service: Cell phone connectivity. Founder Xavier Niel, as GigaOm notes, has been working on the plan for a while, starting with a flat-rate broadband service with IPTV and free wired phone calls on the top of its core data system (essentially because all these things strapped onto a notional "Internet service" are all but identical sorts of digital data). Free.fr was largely seeing its services as a clever vanilla data pipe into user's homes, with additions like TV as a deal-maker for its millions of subscribers.
Niel applied for some mobile phone spectrum during a process back in 2007, and has now rolled out Free.fr's newest and most disruptive offering. By using the install-base's home routers, which are both Wi-fi hubs and set-top boxes for each subscriber household and free-access wireless hubs for nearby roaming users (similar to Fon's model, or other systems in other countries like Portugal's Zon boxes), and by issuing new boxes which are also cell network femtocells, Free has a wireless network that has potentially very broad coverage and an impressive flexibility and redundancy: Data is routed over Wi-fi for preference, but then the femtocells are also present for improved accessibility. The complex, layered system lets Free offer, for an impressively low fee of €20 ($26) a month (less if you're a Free subscriber), free phone calls to tens of countries and both unlimited mobile data access and SMS sending. And it's "sans engagement"—without contract.
There are plenty of potential blockages ahead on Free.fr's roadmap to success, and some are even questioning how on Earth it'll wrangle a profit out of its offers. But it's so very clever and devastatingly cheap, it's bound to push bigger established cell phone carriers like Vodafone to compete on at least some sort of pricing or facilities-offered basis. And that's great for French cell phone users.
If you're a U.S. cell phone subscriber you may have to pick yourself off the floor at this point. In an environment where U.S. providers (apparently with Sprint as a bit of a stand-out exception) are reneging on promises to unlimited mobile data, where SMS fees are still a wicked add-on to everyone's monthly bill—just as the U.S. is going text-crazy—and even giants like Verizon try to nickel-and-dime every customer, Free's model is contrarian. Could a model like Free's ever work in the U.S.? Technologically it's entirely possible, although coverage may be an issue in some of the more so-called "remote" regions of the U.S. where even broadband penetration is weak. But it seems unlikely. Not least because of recent revelations about Google's and Apple's plans to totally disrupt the cell phone industry.
For example: Steve Jobs, in the early days of the iPhone project, imagined that Apple could blanket the U.S. with a cell phone network all of Apple's own. It would've been Wi-Fi based rather than GSM or CDMA (recognize that from Free.fr's model?), and Jobs tried for three years to negotiate, bully, and finagle it into existence. It failed. Instead Apple forced AT&T to accept some very unusual terms as part of its exclusive deal—like zero AT&T branding on the Phone, and no modifications of the OS...and then rolled these terms out across the world to challenge accepted carrier practices. It's not as revolutionary as a carrier-obsoleting wireless grid, but it's a start, and Apple's been trying similar apple cart-upsetting plans since.
Google too, it's now known, had planned for its original own-brand Nexus phone, sold via its own carrier-independent online store—to be a super-cheap disruptive device, perhaps even offering zero costs for the device and some of its uses thanks to deeply-embedded social-informed advertising. Would you accept frequent ads in your cell phone experience in exchange for a zero-fee, or at least dramatically smaller, monthly bill? Our money is on about 50% of the public saying yes to that. But reports suggest that Google's efforts were stymied in no small amount by the cell phone carriers themselves, reluctant to cede any sort of variation on their business model.
Since then Google has seemed to play along with the carriers much more than you'd perhaps expect for an open OS, and has caused recent headlines like "Why I hate Android" due to the seemingly broken promise of the supposedly unrestrained OS from a company who's motto is "Don't be evil"—no matter how awkwardly Google tries to defend it.
Are the carriers really that wicked? You may be tempted to think so when you consider that Verizon is blocking Google's Wallet on its version of compatible Android phones, citing security issues—but really it's because it's in a consortium to promote a different model for the future of digital payment (a revolution that could actually change your life more then you think). More grist to this mill comes from fresh revelations from Motorola's CEO Sanjay Jha, who this week noted, "Verizon and AT&T don't want seven stock [Ice Cream Sandwich] devices on their shelves [...] The vast majority of the changes we make to the OS are to meet the requirements that carriers have." In other words, rather than supporting a stock, uniform edition of Android—which would enable much better cross-platform compatibility, better apps and a more consistent high-quality user experience—the carriers are forcing makers to tweak and customize Android to suit their (not necessarily technical-minded or user experience-forward) agendas, which explains all those own-brand carrier apps that smatter your home page.
Nokia, desperate to make a comeback into the smartphone world with its partnership with Microsoft, is also promising unique phones to each of the U.S. carriers it's doing business with. Is that a good thing? You may argue yes, because it means the phones could be tailored to the special sweetner offerings of each carrier, tricks like a music service, app store, or what not. But if you take a broader view, this is rather odd. Nokia and Microsoft are spending countless millions to hone, refine, and polish their phones—from both a hardware and software point of view, because it's the synergy and user experience that's important as Apple's proved and as Microsoft has agreed with—and they're about to let a mere datapipeline operator dictate how some of that will work.
If one of the biggest companies in the world, Apple, and the global giant of search engine tech and owner of the most-prevalent smartphone OS, Google, can't break the stranglehold of the U.S. cell phone carriers on the market, let alone chip away at their armor-clad business models, then you're allowed to sadly consider that it's unlikely that a model ilke Free.fr's would ever manage to shake up the U.S. industry in the near term.
[Image: Flickr user greyloch]