French operator Free Mobile has significantly increased the price of the Booster add-on for subscribers of its EUR 2.00 plan. New sign-ups for the Booster will be charged EUR 4.99 (US $5.43)/month for an unlimited call allowance and 1 GB of LTE data. This is an increase of 67% on the previous price of EUR 2.99 (US $3.26).
The base EUR 2.00 plan (to which this booster is available to be added) continues to offer 50 MB of data, 120 minutes and unlimited SMS.
Free Mobile recently said that it was the only mobile network operator in France which was committed to stable prices for its subscribers. Assuming it keeps this pledge, the operator will maintain its two standard tariffs, which have been priced at EUR 2.00 (US $2.18) and EUR 19.99 (US $21.75) per month since Free Mobile entered the French market.
Free Mobile launched in 2012 with simple and low-priced offers that significantly undercut the other major French telecom operators at the time. The operator’s entry into and disruption of the French telecom market set the tone for the next 5-10 years of industry activity globally. Free pioneered the model of the discount mobile provider with a limited number of simple “no frills” plans focused on mobile data. It would not be an exaggeration to say that the industry, both in France and around the world, has not been the same since its arrival.
In raising prices on its Booster add-on, which has only been available for a few months, Free may be signaling that its uber-discounted model is nearing its breaking point. As operating and infrastructure costs have increased across the board for most MNOs, maintaining a commitment to pricing stability will only take an operator so far. Increasing the cost of the Booster is unlikely to draw serious pushback since it is relatively new, and an add-on that is only available to subscribers of the EUR 2.00 plan. As such, it seems like an ideal target for the operator to experiment with price increases to gauge the response from French consumers.
Given that the operator’s prices have been fixed for more than a decade, it is likely that Free is facing some pressure for its prices to keep up with inflation. Since bumping up the pricing of an add-on does not explicitly violate the operator’s promise to keep prices steady, it can use this as a way to boost revenues. Further, if consumers appear willing to stomach the increased costs, Free may view this as an opportunity to break its commitment and raise the price of its core offerings in the months ahead.