Follow-Up: How France’s “Free” Cell Phones Really Did Disrupt The Industry

Last week a new French effort to shake up the cell phone industry began when launched an all-but-free, unlimited cell phone service. It was expected to wake up the bigger industry players–and now we know it has.

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Working across a clever meshed network of cell phone signals from the usual towers, 3G signals emanating from user’s broadband set-top boxes which also double as femtocells and Wi-Fi signals, the idea of broadband vendor’s new contract-free cell phone offering was to get users on board for as little as €20 a month–or about $25–and less if you’re one of Free’s existing broadband subscribers. That was a target that the mainstream cell operators may find challenging, thanks to the supertanker-like reaction times of their overall business model, which relies on extremely complex and expensive infrastructure.

Nevertheless, Free’s efforts really are having a disruptive effect. Several of the bigger networks in France have radically overhauled their tariffs, at the budget end of the scale, to compete with Free’s €20 target. One operator, GigaOM reports, has even launched a new SIM-only service that greatly beats Free on price…but has a very limited SMS, voice minutes, and data access ceiling. Although it plans to add unlimited access to Facebook and Twitter to this new service soon, the overall package is very far from Free’s unlimited voice, SMS, and data. The other French operators, Reuters notes, are also scrambling to react–Bouygues Telecom has an attractive smartphone package for around €45 a month with unlimited everything, but it’s a 24-month contract (and it looks like the price is really €64.90 before discounts).

These maneuvers do suggest the established cell phone players are being forced to move with uncustomary speed to react to Free, even if they can’t quite match it. The thing is the adjustments they’re making to their tariffs seem only to think of the budget end of the scale. Whereas Free’s unlimited deal is a direct broadside at their most expensive tariffs, with many bundled minutes and MB of data. For now this gives Free… free room to operate at will, and perhaps to steal many of their customers.

We’re still not convinced such a disruption would be easy to pull off in the U.S., though.

[Image: Flickr user rgarciasuarez74 ]

Chat about this news with Kit Eaton on Twitter (who doesn’t live in France, but with Free’s prices he’s tempted) and Fast Company too.


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