Free Mobile harnesses 4m hotspots for data offload

France's Free Mobile continues to disrupt the traditional cellular model, now claiming the world' largest carrier-run Wi-Fi network for data offload. It has opened up its four million hotspots to its cellular customers to add value to its proposition as well as reducing strain on its own 3G systems.

Free's parent Iliad has Wi-Fi embedded in the home gateways issued to customers for its DSL and fiber broadband services. Moreover, Free has a community element to its offering, under which customers share part of their broadband capacity with other Iliad subscribers, FON-style. The existence of this national Wi-Fi network, often backhauled by fiber, was one of the distinguishing features of Free's mobile plan, setting it apart from the usual price-cutters through its ability to support large quantities of data and innovative service bundles.

Now Free Mobile users on a standard €20 plan (€16 for Freebox customers) will be able to configure their phones to connect automatically to any Free hotspot, gaining unlimited data access and VoIP calling. Many expect the facility to be extended to the lower value mobile plans, which scale down to €2 a month and have sparked a price war in France.

The system highlights the kind of offering cellcos are aiming for round the world, with new methods and standards to make roaming between cellular and WLan networks more seamless. Free customers do not have to enter passwords, as their SIM cards authenticate and connect them without human input.

With the capacity of 4m hotspots behind it, Free can hope to reduce the strain on its own 3G network and cut the bills it is paying to MVNO host Orange. These appear to be far higher than first thought. Stephane Richard, CEO of France Telecom, said the deal could generate as much as €2bn for his firm, twice the figure initially reported. "We had said the contract would bring €1bn. It could be double depending on Free's capacity to develop its network," Richard said in an interview with Liberation.

Orange has come under fire from its rivals for agreeing to the roaming/MVNO deal at all, since it has allowed Free to offer national services without having to complete the build-out of its own 3G network. Free's own systems are supposed to cover 27% of the population at this stage, though competitors have claimed this is not the case. Once the market stabilizes after the disruptive effect of Free's launch, with its prepaid, SIM-only deals, Richard thinks it could win over about 15% of the total mobile market.

Free, plus new rural coverage obligations and the impact of recession, have put French cellcos under intense cost pressure. The second and third operators, SFR and Bouygues Telecom, have reportedly held talks focused upon a network sharing agreement for rural areas, aiming to cut opex bills by 10%. These savings would offset a similar expected drop in revenue following from the recent price war sparked by Free's launch. According to local newspaper Journal du Dimanche, the two operators are also holding separate informal talks with TDF, the French TV broadcaster, which has 7,000 transmission masts mainly located in rural areas.