The rise of Xavier Niel says a lot about French business(economist.com)
economist.com
The rise of Xavier Niel says a lot about French business
http://www.economist.com/people/displaystory.cfm?story_id=14402214
6 comments
I would also add that historically he's the one (or Free should I say) who kicked the progression of internet in France.
Back in the days of the 56k and lower you had to pay a subscription to the providers (usually more than $20 a month) and a surcharged number. They introduced their service "Free" which meant you only paid a local communication to France Telecom with the latest technology available at the time (V.92...).
Many of the competitors of course had no choice but to align themself, then came the DSL...
Back in the days of the 56k and lower you had to pay a subscription to the providers (usually more than $20 a month) and a surcharged number. They introduced their service "Free" which meant you only paid a local communication to France Telecom with the latest technology available at the time (V.92...).
Many of the competitors of course had no choice but to align themself, then came the DSL...
So how does he manage to cut his prices so low? Does he use automation and other methods to improve efficiency?
They have an online self-care system - you use it to signal a problem and the system runs diags on the Freebox, phone line etc. Yup, completely automated.
Unfortunately, if your problem falls between the cracks (something new, that is not in their list of common troubles) then it can get tricky, and you need to replace the Freebox. They'll replace it for free, of course, but it's still a hassle make the demand, get the delivery (UPS usually), install the new Freebox, send the old one in. This is all completely automated again, and the Freebox warehouse is outsourced to a specialized company. Free only has engineers : hardware, software and (lots and lots of) telecom guys. BTW, one of their top VPs wore a teeshirt saying "Go away, or I will replace you with a small shell script". So yeah, these guys love automation, they are hardcore engineers, nerdy to the core.
Anecdote : some time ago they launched a new version of the Freebox. It was supposed to be for new subscribers and replacements. People (especially geeks, but mostly everybody) asked for replacements, because the new version had a bigger harddrive and some new features. Free had to replace many more Freeboxes that forecasted. So many of the consumer reports among the lines of "My Freebox broke so I had to have it replaced" should be more like "I invented a problem to get the free upgrade".
Furthermore, you can replace the HDD with a bigger one or connect an external HDD - that's how you recognize a geek in Paris - his ADSL modem is tuned.
Unfortunately, if your problem falls between the cracks (something new, that is not in their list of common troubles) then it can get tricky, and you need to replace the Freebox. They'll replace it for free, of course, but it's still a hassle make the demand, get the delivery (UPS usually), install the new Freebox, send the old one in. This is all completely automated again, and the Freebox warehouse is outsourced to a specialized company. Free only has engineers : hardware, software and (lots and lots of) telecom guys. BTW, one of their top VPs wore a teeshirt saying "Go away, or I will replace you with a small shell script". So yeah, these guys love automation, they are hardcore engineers, nerdy to the core.
Anecdote : some time ago they launched a new version of the Freebox. It was supposed to be for new subscribers and replacements. People (especially geeks, but mostly everybody) asked for replacements, because the new version had a bigger harddrive and some new features. Free had to replace many more Freeboxes that forecasted. So many of the consumer reports among the lines of "My Freebox broke so I had to have it replaced" should be more like "I invented a problem to get the free upgrade".
Furthermore, you can replace the HDD with a bigger one or connect an external HDD - that's how you recognize a geek in Paris - his ADSL modem is tuned.
Amazing. Thanks for the info. I think I love the company already. The t-shirt was funny. The free trademark is also clever. The freebox is also an interesting piece of equipment http://en.wikipedia.org/wiki/Freebox
Coincidentally a similar thing is occurring at the moment in Canada.
http://www.theglobeandmail.com/globe-investor/the-minnow-in-... "Canada's telecom giants are fighting a pitched battle to keep Globalive out of the wireless pool. But CEO Anthony Lacavera and his Egyptian partner are determined to bring competition to the industry. Is this the beginning of the end for the cozy wireless establishment?"
Unsurprisingly the three existing companies are trying to lobby the government to keep this new entrant out.
http://www.theglobeandmail.com/globe-investor/the-minnow-in-... "Canada's telecom giants are fighting a pitched battle to keep Globalive out of the wireless pool. But CEO Anthony Lacavera and his Egyptian partner are determined to bring competition to the industry. Is this the beginning of the end for the cozy wireless establishment?"
Unsurprisingly the three existing companies are trying to lobby the government to keep this new entrant out.
Unfortunately the government when selling new spectrum also sold large amounts of it to the existing incumbents. The prices are so high here that the incumbents shouldn't have had a chance to bid. Canada is among the highest in mobile rates in the Western world. Here's hoping Globalive will shake things up.
An upstart entrepreneur is breaking the market open with a radical price-lowering plan, with the full support of regulators ("To their credit, France’s authorities have backed Mr Niel all the way")? I'll believe that when I see it.
I hope he succeeds because the prices for mobile service is atrocious compared to internet and landlines. I fail to see how the 3 operators are never brought up on charges of market collusion. But Sarkozy is best friends with two (Bouygues/Vivendi) and Orange/FT has it's unbreakable union. I can see why it's happening, but they just busted Apple/Orange exclusive contract, the same courts should be going after the big 3 operators.
The freebox is quite nice. I might have gone with them if the customer support wasn't so horrible. A friend dropped them for Wanadoo/Orange because they own the lines and are quicker on the support problems. But they do cost more. I ended up with Neuf, who was bought up by SFR. If they don't get their act together and put fibre in my building I will drop them for free. I just received a letter from free stating that fibre is now available in my neighborhood.
If their phones are as flexible as the freebox then this will be very interesting.
The freebox is quite nice. I might have gone with them if the customer support wasn't so horrible. A friend dropped them for Wanadoo/Orange because they own the lines and are quicker on the support problems. But they do cost more. I ended up with Neuf, who was bought up by SFR. If they don't get their act together and put fibre in my building I will drop them for free. I just received a letter from free stating that fibre is now available in my neighborhood.
If their phones are as flexible as the freebox then this will be very interesting.
Hang in there - I'm working on the replacement for the neufbox right this minute, and it is a very cool piece of kit.
For 29,99€ you get:
28 mbit/s Free calling to 90 nations HDTV 100 channels and more pay channels Video on demand remote access to the video recorder Access to 3 million wifi spots in the country
28 mbit/s Free calling to 90 nations HDTV 100 channels and more pay channels Video on demand remote access to the video recorder Access to 3 million wifi spots in the country
Come to Canada, starting in Quebec! It's even worse here.
"If he succeeds in disrupting another business, the establishment may have to acknowledge him."
"He forced the incumbent cellular providers to innovate."
The article relies too heavily on tropes like these, IMHO.
"He forced the incumbent cellular providers to innovate."
The article relies too heavily on tropes like these, IMHO.
Personal remark : this guy is freaking awesome, always seeking to disrupt markets to lower prices. The Free triple-play subscription (unlimited broadband, cable TV + free phone calls to most of the world) is so cheap it's a freaking no-brainer. Before, it used to be an exercise in comparison shopping : what operators are available in my area, are they good, what are the prices. Now, you just get Free and stop worrying. They have a bad reputation for customer service, because, just as Google, they like to automate everything (heard that their back-office is huuuuuge).
If he could get the license and disrupt the mobile telecom market, that would be great.
About the Freebox, the set-top box they provide to subscribers : as if everything they do is not hard enough, they designed custom hardware and software for their combined set-top box/cablemodem. Ok, the UI is not Apple level, but it provides lots of awesome stuff : a TiVo like DVR, video broadcasting, FTP and HTTP servers, a Wifi (802.11-N !) access point, a router and more.