The probe follows claims from rivals that large amounts of its infrastructure is not yet operational, and it is relying on its partnership with France Telecom's Orange to provide network services.
IHS Global Insight Perspective | |
Significance | Free Mobile has denied it has turned off all or part of its network, and has welcomed the probe, saying the rumours are merely efforts by competitors to discredit it. |
Implications | Regulator Arcep has stressed that none of Free's rivals have filed a formal appeal, nor had any concrete elements been brought to its attention to back up the allegations. |
Outlook | Iliad seems comfortable with the probe, suggesting the rumours are yet another effort to discredit the new entrant, as its rivals have tried every trick in the book to prevent the development of competition. |
The French telecoms regulator will carry out an inspection of the mobile network coverage being supplied by Free Mobile, following a government request for a probe into the infrastructure of the new entrant. Les Echos reports that the French minister responsible for telecoms Eric Besson has asked regulator Arcep to verify whether the network of Iliad's Free had the required network reach when it was granted its licence to operate at the end of last year. The probe follows claims from Free's rivals that large amounts of its infrastructure is not yet operational, and it is relying on its partnership with France Telecom's Orange to provide network services.
Free Mobile, the fourth network operator in France, was granted its spectrum licence at the end of 2009, and was given the green light by Arcep to launch in January this year in December, as the regulator was satisfied that it had reached its target of coverage of at least 27% of the country's population (see France: 14 December 2011: France Gives Free Mobile Green Light, Will Launch 12 January). Free has a network-sharing agreement with Orange to allow it to provide services to the rest of the country, but has since been accused of turning off its own overloaded mobile antennas and over-relying on its rival's network, contrary to the terms of its launch.
Outlook and Implications
- Free Mobile Denies Allegations and Welcomes Probe: Arcep says it will now carry out a full network coverage analysis, in a bid to quell accusations levied by Free Mobile's competitors that it is breaching the terms of its licence. The regulator said the probe would include a list of installed towers and those that have been activated, as well as any reason for shutting off some of the towers in its network, and has pledged that the results of the inquiry will be made public. However, Free Mobile Chief Executive Maxime Lombardini has denied it has turned off all or part of its network, and welcomed the probe, adding that "When you are faced with false rumours, the best thing to do is get back to the real facts". The regulator Arcep has stressed that none of Free's rivals have filed a formal appeal, nor had any concrete elements been brought to its attention to back up the allegations, suggesting that Free is correct in its assertions that the rumours are merely efforts by competitors to discredit it.
- Rivals Running Scared as Price War Deepens: Free Mobile launched its new low-cost mobile offers three weeks ago, and is reportedly on track to gain 1 million customers by the end of January, and expects to be able to break even with just a 4–5% share of the French mobile market (see France: 19 January 2012: Free Mobile on Course to Gain 1 Mil. Users by End-Jan—Report). France Telecom has recently claimed it will not drop its prices to meet the challenge of Free, calling the its low-cost strategy "reckless" and claiming it will damage investment in the French mobile sector (see France: 23 January 2012: Orange France Will Not Drop Prices to Compete with Free, Attacks Iliad's "Reckless" Strategy). However, France Telecom has already lowered prices of its low-cost brand Sosh, while rival SFR has launched a virtually identical offer under its Red banner. Third-placed player Bouygues Telecom also announced last week it has cut the prices of its unlimited mobile calls package, Eden, to EUR20 (USD26) from EUR25, a reaction to a similar offer from Free priced at EUR19.99. Free has the current operators running scared, as they have enjoyed comfortable profit margins in recent years as French mobile prices largely stagnated compared to its European neighbours. Iliad seems comfortable with the probe, suggesting the rumours are yet another effort from its rivals to discredit the new entrant, as they have so far tried every trick in the book to prevent competition developing in the French mobile market.