Wireless Carrier Free Rattles French Market
Will 'Freemium' Models Have Same Impact in U.S.?
Earlier this year we noted how French ISP Iliad was shaking up the French wireless market
with some creative pricing, which included an introductory basic free tier of service (an idea that's taking root in the States now
). With the offering clearly popular among users tired of paying an arm and a leg to France's uncompetitive incumbents, those incumbents recently started to try and shut Free down through higher rates, arguing the upstart was causing too much congestion
(no evidence was given for the congestion bogeyman
) so they needed to scrap signed contracts and pay more.
When that didn't work, incumbents tried to claim that Free was engaged in foul play and was failing to meet build out requirements, claims an investigation found were absolutely false
. Even though incumbents like FranceTel utterly refused to move on price, Free's entry has really had a quite profound impact on the French market
Nearly 6 months after Free Mobiles commercial launch, every week brings further aftershocks to the seismic shift it has triggered. The latest one occurred last week at the second operator SFR which lost its executive chairman and not-yet arrived new CEO as its parent company Vivendi intends to explore strategic options for the SFR unit. This turmoil reflects both the significant impact Free Mobile has already had and the long term disruptive force it represents for the market structure.
Meanwhile French incumbents hope to differentiate themselves by launching "premium" LTE services at premium prices, the kind of strategy exemplified by Verizon here in the States. Such disruptive offerings are just now taking off in the States (FreedomPop, Ting, Republic Wireless) and it will be interesting to see if they have nearly the same impact on the market.
| |dvd536as Mr. Pink as they comePremium
Never fly in the USA Theres no rape / gouge in free.
Unfortunately, it won't work here The problem in the United States is that these upstarts don't own their own networks. Instead, they're renting space from the incumbent carriers, so, if they have any sort of impact, the carriers will either jack up the rates charged to these MVNO's or simply pull the plug entirely.
If these companies want to be truly independent, they need networks of their own. There is no way around that fact.
Re: Unfortunately, it won't work here It will eventually happen with the bigger prepay outfits too. For example, if Verizon lost millions of subscribers to Page Plus, Verizon certainly wouldn't make it financially possible for PP to offer lower rate prepaid services.
Re: Unfortunately, it won't work here
said by scott2020:This could be considered an anti-trust issue tho, because it would be verizon using its power as an incumbent and carrier status to squash competition. If any current MVNO got shut down like this, I can garuntee you that it would be an anti-trust lawsuit, and that the DOJ would likely be involved(and likely break up the babybells again). MVNOs offer the "competition" that wireless carriers always point to, even it it does not drive rates down that much, and if they squashed those, it would be a major sign of a monopoly power in effect. Sure they own the towers, but they cannot exponentially raise rates for MVNOs just because the MVNO is taking subs away from them.
It will eventually happen with the bigger prepay outfits too. For example, if Verizon lost millions of subscribers to Page Plus, Verizon certainly wouldn't make it financially possible for PP to offer lower rate prepaid services.
Re: Unfortunately, it won't work here Sure they can. Back when I worked at a regional ISP about 12 years ago, SBC was actually charging us more for a wholesale DSL line than they were charging to individual users. And we weren't the only one, yet nothing was ever done.
Was that illegal? Maybe, maybe not, but we never got any kind of relief.
Re: Unfortunately, it won't work here and AT&T STILL does that. So does Verizon.
| || There's no reason that an MVNO has a legal right to sell service on verizons network and certainly not at prices verizon didn't agree to.|
Here's the business justification for an mvno. So verizon markets themselves as a premium brand and charges more than anyone else in the country. And they get people to sign up and stay through marketing and contracts. But they still have leftover capacity on their network. They could destroy their premium image and margins by lower prices to try and gain more customers. OR they could allow the equivalent of a no name brand product to use their network. It's good for Verizon in 3 ways.
1. They get to keep their premium brand and it's associated margins and costs while obfuscating virtually equivalent product from consumers.
2. A customer on their MVNO is a customer not giving their money to Verizon's competition. Meaning, if a customer wont pay Verizon expensive rates at least they get something out of them and more than their competition is getting out of the consumer.
3. Once costs are met, unused capacity is like leaving money on the table.
Here's an example from another are of commerce. If Pillsbury runs a flour mill and packaging factory. They fill up bags of flour and sell them to stores with the Pillsbury brand. This factory has capacity, the rent and most of the labor/energy costs and so on are already covered by current products, why not package generic or no name flour for "kroger" or "great value" or "western family". As long as you keep your price structure and the costs you sell to the off brands in line, and consumers are clueless that it is virtually the same flour often from the same factory then they get to sell even more and make more profits.
Kroger is not entitled to sell Pillsbury's flour. They are welcome to source another factory, or build their own.
| |Vchat20Landing is the REAL challengePremium
| Actually you would more than likely see them acquire PP and integrate into their own business/offerings somehow. Or simply do like Sprint with Virgin and Boost Mobile and continue to run the brands separately and leave operations intact but still have ownership.|
I swear, some people should have pace-makers installed to free up the resources. Breathing and heart beat taxes their whole system, all of their brain cells wasted on life support.-two bit brains, and the second bit is wasted on parity! ~head_spaz
new frontier.. On another note.. Verizon and their associated cable companies might be in competition to replace PAYPHONES with free wifi hotspots (maybe even free usb port charging stations).
Isps Just like the oil barons of the world don't wanna hear shit about self sufficiency, wind turbines, solar power, electric motors car engines etc. This won't fly in the U.S. These companies have the best lobbyists / congressmen & women money can buy. If washington gave a flying flip about americans, this country wouldn't be in the shape its in... Don't believe me, see here...