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    Case Study Free Mobile

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    hayet
    Free Mobile disrupted the French mobile market in 2012 by offering: 1) Unlimited communication at low prices without subsidies for mobile phones. 2) A non-store model and viral marketing rather than traditional advertising. 3) No ownership of networks, instead using roaming agreements like with Orange. This new business model was quickly copied by incumbent operators and transformed the market, lowering prices while expanding the number of subscribers.

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    Case Study Free Mobile

    Uploaded by

    hayet
    25 views2 pages
    Free Mobile disrupted the French mobile market in 2012 by offering: 1) Unlimited communication at low prices without subsidies for mobile phones. 2) A non-store model and viral marketing rather than traditional advertising. 3) No ownership of networks, instead using roaming agreements like with Orange. This new business model was quickly copied by incumbent operators and transformed the market, lowering prices while expanding the number of subscribers.

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    CASE STUDY FREE MOBILE

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    Free Mobile disrupted the French mobile market in 2012 by offering: 1) Unlimited communication at low prices without subsidies for mobile phones. 2) A non-store model and viral marketing rather than traditional advertising. 3) No ownership of networks, instead using roaming agreements like with Orange. This new business model was quickly copied by incumbent operators and transformed the market, lowering prices while expanding the number of subscribers.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    25 views2 pages

    Case Study Free Mobile

    Uploaded by

    hayet
    Free Mobile disrupted the French mobile market in 2012 by offering: 1) Unlimited communication at low prices without subsidies for mobile phones. 2) A non-store model and viral marketing rather than traditional advertising. 3) No ownership of networks, instead using roaming agreements like with Orange. This new business model was quickly copied by incumbent operators and transformed the market, lowering prices while expanding the number of subscribers.

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    Free Mobile

    Before the arrival in 2012 of a fourth operator, the French mobile telephony market
    had become, in twenty-five years, a market of very high consumption with,
    paradoxically, a fairly low competitive intensity.

    Mobile telephony in France: an oligopoly dominated by three historical players

    The first mobile telephone network (Radiocom 2000) was deployed in 1986 by
    France Telecom. In 1987, SFR became the first private operator in this market. It was
    joined in 1996 by Bouygues Telecom. During the next fifteen years, the market will
    grow rapidly to reach 65 million SIM cards. A number of technological innovations
    (UMTS, 3G, 3G+, 4G) will enable existing players to generate very high levels of
    profitability. Many virtual operators (called MVNO, Mobile Virtual Network Operator),
    which do not have infrastructures, will try to penetrate this market, without notable
    successes, in spite of the power and the notoriety of several of them (Carrefour ,
    Virgin, Credit Mutuel, M6, etc.).

    The arrival of Free Mobile: or how to disrupt a market

    Xavier Niel, founder of Iliad, the leading telecommunications group in the provision of
    broadband access in France, with the Freebox, has decided to take up the challenge
    of this new mobile license. Thus, Free Mobile was created in 2007. The new offer
    was presented by Xavier Niel himself in January 2012. This will revolutionize the
    industry model, by going against the usual rules of the game of historical players.

    The new value proposition is particularly simple since it is based on an unlimited


    communication offer – which is a real innovation – and a basic offer (one hour of
    communication). This is specifically adapted for existing Free customers, holders of a
    Freebox, with a commercial advantage, to arouse their interest and capitalize on the
    already existing Internet customer base. The price level is well below incumbent
    operators.

    A second breaking point lies in the fact that the communication offer does not include
    a mobile phone. This makes all the more sense as the market has reached a level of
    maturity such that consumers are already largely equipped with it. As there is no

    1
    need to subsidize a mobile phone, Free Mobile innovates by offering a non-binding
    offer, materialized by the provision of a simple SIM card.

    The model without a store, which has proved its success for the Freebox, is used for
    Free Mobile. Its launch strategy is also part of this logic of breaking with the
    conventions of the existing market, since it is solely based on digital and viral
    communication, without the usual recourse to the major traditional mass media, and
    therefore without the purchase of advertising space

    Finally, still unlike the market leaders, Free does not own its network, since a
    roaming agreement has been concluded with Orange, allowing extremely rapid
    deployment, with limited initial investments.

    In the end, this new business model paid off and radically transformed the mobile
    telephony market in France. Four years after its arrival, Free Mobile has captured
    13% of the mobile market in France. The incumbent operators were deeply affected
    and quickly copied the Free model, deploying similar offers, with new brands. If the
    value generated by each consumer has greatly decreased individually, it has enabled
    the market to expand in terms of the number of consumers..

    Questions

    1. Describe Free's business model: how is it different from that of its competitors?

    2. Why did incumbents copy Free's business model?

    3. Has Free created a new market?

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