An analysis of the disruptive impact of the entry of Free Mobile into the French mobile telecommunications market. (April 2019)

• Record Type: Journal Article
• Authors: Berne, Michel; Vialle, Pierre; Whalley, Jason
• Is Part Of: Telecommunications policy. Volume 43:Number 3(2019)
• Page Start: 262
• Page End: 277
• Publication Date: 2019-04
• Subjects: Free mobile -- France -- Mobile telecommunications -- Disruption -- Entry -- Competition; Telecommunication -- Periodicals; Télécommunications -- Périodiques; 384
• DOI: 10.1016/j.telpol.2018.07.007
• Languages: English
• ISSNs: 0308-5961

Abstract

Abstract: The issue of disruptive operators has recently gained interest among researchers and regulators. From a regulator's perspective, disruptive operators can increase competitive rivalry in markets dominated by a handful of large companies, thereby allowing consumers to obtain more benefits in terms of price and quality. Largely overlooked in this discussion has been the impact that the specific identity, complementary assets of operators, and their strategies have on the marketplace dynamics. In this paper we explore the impact that one such operator – Free Mobile – has had on the French mobile telecommunications market. Drawing on a wide range of secondary sources, our analysis finds that the entry and subsequent growth of Free Mobile has had a complex and multi-faceted impact on the market. Their growth has been at the expense of the other three mobile network operators active in the French market, while their innovative business model, which enables it to compete on the basis of low costs, has been copied by its rivals. The specific characteristics of Free Mobile and of its strategy have contributed to a significantly alteration to how competition occurs in this market. This, in turn, triggers a strong incentive for restructuring, which is actually restrained by regulatory concerns. Highlights: We explore the impact of Free Mobile on the French mobile telecommunications market. The conditions of entry as set by the regulator have played a significant role in the disruption. Complementary assets allowed implementing a low-cost business model that facilitated disruption. Significant impact on prices, profits, or employment can be observed. This, in turn, triggers a strong incentive for restructuring, which is actually restrained by regulatory concerns.