March 26th, 2009 by Gordon Cook
Free, the broadband arm of Groupe Iliad is an increasingly important French national broadband player. Free’s management is extremely innovative.
Among other things on March 19 it announced that it is building an all IP mobile network so that it will no longer have to pay Orange for the circuits it resells. A very interesting point made by Free to the press “There is really something you don’t seem to be grasping: investing in optic fiber will make our margins explode. Today an unbunbled customer is 50% margin or thereabouts. When we migrate the customer to optic fiber, we move to 85 or 90% margin.” See Benoît Felten’s translation in the video below. These remarks are in the last of the three links below.
Free has disrupted the French market. Starting from humble beginnings in the late 90s, it is now the second largest broadband provider in the French market. It has defined the reference model broadband triple-play offer in France and is now applying its successful strategy to two new markets: fiber to the home and mobile.
On March 19th, Free announced its 2008 results – down because of its purchase of ISP Alice. (If not for the Alice acquisition it would have had a 44% increase in profit. It got a lot of people talking with blunt and well deserved attacks of French incumbent Orange.
Free customer portal www.universfreebox.com filmed the whole annual results Q&A and Yankee Group analyst and www.fiberevolution.com editor Benoît Felten subtitled them in English. The video is in several sections due to Youtube limitations. Here are the first three:
Benoît adds: Check the first of the above links, I explain how you get subtitles on Youtube. Essentially, click on the box in the lower right hand corner of the youtube screen.
COOK”s Edge: The candor of Free’s management in its discussion the French market is extremely refreshing. It wants structural separation and minces no words in explaining why. If only we had ISPs with the gumption to talk to the incumbents like these Frenchmen! Opps - our incumbents are out only ISPs. So much for free markets!
UP DATE Benoît points out that in your “first paragraph you mention the all IP mobile network, but the margin mechanisms you describe apply to wireline fiber not mobile. Currently Free does not have a mobile network, they’re just seen as the most likely candidate for the new licence coming up.”