France gets a fourth third generation network
Free aims to spark price war
The French regulator has awarded its fourth 3G licence, with Illiad-owned Free winning the beauty contest to get the spectrum at a knock-down price.
Second prize would have been difficult in this particular beauty contest as there was only one entrant, but the result means that Illiad will pay €240m for its licence, compared to the €619m the incumbent operators handed over.
That's really annoyed the incumbents, including Orange who threatened to take the matter to the European Commission on the basis that the cheapo spectrum amounted to state aid. That argument is slightly undermined by the fact that Free is only getting a third of the spectrum the other operators got (10MHz at 2.1GHz, split into two 5MHz channels).
But the company is still going to have to spend a billion euros building a network; the licence requires the extension of the network to 90 per cent of Frenchmen by 2018.
Making money won't be easy - the French market is pretty saturated, so customers are going to have to be taken from the competition. Illiad reckons it can gain customers by being cheaper, but it's going to have a hard time carving a niche for itself. ®