Free Mobile in the French Market.
I’m an exchange student; I already apologize for my English grammar and spelling. In 2012, a big change came into the French market for mobile operators (such as Fido, or Rogers here). Free, which was an internet suppliers, just launched his mobile service: Free mobile. It is a big revolution in the French market that only had 3 big brands since the mobile service exists, for more than 15 years now: SFR, Bouygues Telecom and Orange. It’s also a revolution because Free came with offers more than 50% less expensive than its competitors, which are according themselves on high prices for such a long time. 1) French mobile operator’s market.
Until January 2012, they were only 3 real big brands in the market: SFR, Bouygues and Orange. Here are the market share in 2009, in France : Orange : 45,39% (25 millions of clients), SFR : 36,66%, (20,2 millions of clients), Bouygues : 17,95% (9,89 millions) and it still kind of the same today, as you can see in appendices 1. In 2011, Orange had 26, 2 millions of mobile client. Since 2004, there are also « virtual » operators such a Virgin Mobile, or La Poste, which don’t have a network: services are provided to them by those 3 big brands (for example Virgin Mobile uses SFR network). They are called the MNVO (mobile network Virtual operators): in 2010 they were 11 in France, today more than 30. MNVO are not really competitors for those big firms: they are a way for those big mobile operators to make profits, a way to reach specific target. In France it’s mostly used to reach young people for example with offer with music, or special Facebook connection stuff. Sometimes it’s more profitable for big brands such as the 3 firms in France to give a network to MNVO, and get money for that, than doing a special low cost offer for the young people. But MNVO gets more and more important: at the end of 2011, they had a market share of 10, 7% (from something non-significant 5 years ago). The market for mobile phone is a difficult market to enter: studies shown that the market mobile penetration is more than 100% , which meant that the market is really full. In fact, there is more than 1 mobile per person in France. They are also a lot of restrictions: Free Mobile took a lot of time to come into the market because in France, there is an organization called ARCEP which is in charge of regulating the market; for example Free had to proof to them that they can cover 27% at least of the French territory with their network before launching their product. To finish, they are a lot of communication between the 3 big operators: it’s supposed to be forbidden but they makes their prices by consulting each others. So they all have the same prices, kind of the same offers. As French big firms, they also have a lot of power on the government, which is actually a major shareholder of those big firms, to influences law and decisions.
2) Free’s main competitors
The principal direct competitors of Free are the 3 big companies which are Orange, SFR and Bouygues because even if for now Free use a little bit of Orange’s network for now, it has its own network, whereas the MNVO don’t have. They are still indirect competitors thought, because they had a part of the market. Orange is the market leader for a long time: it’s an historical operator, and it belongs to France Telecom which was the only telecom company in France until 5 years ago. They have the biggest network in France, and they also provides internet. SFR is the 2nd firm in the market. They’ve been here for ages also. They now try to focuses on firms need in telecommunications, especially for little and middle firms. They also provide internet connexion but this happened recently. Bouygues is the last competitor, one of the Martin Bouygues’s big companies. Obviously the only way for Free to enter the market and grow, is too take market share from those companies,...