Are users defecting from France’s Free Mobile?
Posted on April 26, 2012 at 06:09 AM EDT
France's mobile market has been upset by the innovative approach of Xavier Niel's low-cost operator, Free. But after an initial boost of customers, rivals say the company's growth is slowing. Is its momentum in danger of draining away before it's even really started?
Since launching in January, French operator Free Mobile has been kicking up a fuss for one simple reason: it dramatically undercut the competition by offering unlimited voice, text and data for just €20 a month.
While competitors griped about the brash new entrant, the reality is that Free wasn’t slashing prices for no reason — it had an innovative method up its sleeve: to offload a large amount of traffic to its network of 4 million Wi-Fi hotspots spread across the nation.
But after an initial boost of users who switched to Free, which is part of billionaire entrepreneur Xavier Niel’s Iliad Group, the question now is whether the service can keep them for long enough to become a serious competitor.
While somewhere between 800,000 and 2 million users defected from rival services, those competitors now say that the shift has slowed down dramatically.
According to Les Echos, Orange France marketing director Alice Holzmann says that:
The number of requests for change of operator — which had skyrocketed during the first half of January — has dried up. Today she says “the number of applications for portability has returned to the same level as it was prior to the launch of Free.”
In addition, each week around a thousand customers who had switched to Free rejoin Orange, SFR or Bouygues Telecom. So it’s become a numbers game — how can Free balance growth and stop the sort of churn that could undermine its strategy right from the start?
While the reasoning for the customer shift is not yet clear, the fact that the Wi-Fi offloading was only rolled out last week could be playing a big part. And, of course, rivals have a big reason for playing up defections — when the reality is that high churn levels are a natural, accepted part of the mobile business.
Coming several months after the initial launch, it’s enough time for users to become disenchanted or frustrated. Can it last the distance?
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