Disruptive French broadband provider Free Mobile has announced pricing for its new mobile venture, and it's cheap, really cheap, thanks to lots of Wi-Fi and femtocell offloading.
For €20 a month the customer gets unlimited calls within France and to 39 other countries including the USA – and unlimited data too, with the price dropping to €16 if the customer is also getting ADSL from Free. Just €2 a month buys the user 60 minutes of voice calling and 60 SMSes too, a price which drops to nothing a all when bundled with the aforementioned ADSL, and you can't get much cheaper than that.
Free reckons it can do this because it owns the set top boxes in customers' homes, as the company's founder recently explained to Gigaom. Free already uses the wi-fi in those set-top boxes to provide connectivity to passing Free customers, just as BT Fon does in the UK, but once the boxes get femtocells built in then the operator will be able to do the same thing with voice calls too.
Data will be routed over Wi-Fi by preference, and there will be a cap on cellular use of 3GB per month, but it's still hard to see how Free can hope to make money.
Talking to Gigaom, the company's founder suggested that telecoms companies should make money selling identity and payment services, rather than communications, which is certainly going against the industry trend. UK and US network operators have publically given up on their aspirations of making money from payments, instead betting they can sell advertising and token services based on those payment platforms, leaving Visa, MasterCard and their ilk to manage financial services.
But Xavier Niel, founder of Free, is an investor in Square - the self-proclaimed revolution in payments which uses iPhone to take credit card details - so he clearly believes there is room for new players to take another slice of the payment pie.
At the very least Free is going to start a price war in French mobile services. Industry analysts Ovum reckon that's already started, with expectations of Free Mobile's offering prompting Orange, SFR and Bouygues Telecom to launch lower their price tariffs to compete. Ovum reckons Free will snap up a good number of customers quickly, but might then have trouble gaining traction with customers who value coverage more than price. ®