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Free's Low Rates Rattle French Telecom Industry

People use their mobile phones, in Paris.
People use their mobile phones, in Paris.Photograph by Martin Bureau/AFP/Getty Images

Xavier Niel, the entrepreneur who shook up France’s telecom establishment by introducing super-cheap Internet access, is on the move again. With rates as low as €2 (about $2.60) a month, the Free Mobile phone service launched in January by his Iliad group has lured an estimated 2 million subscribers away from competitors. “There isn’t another operator in the world that has won as many subscribers as us in such a short time,” Niel said at a recent press conference.

Free’s foray into mobile has already shaken the country’s top three operators—France Télécom’s Orange, Vivendi’s SFR, and Bouygues Télécom—which until now controlled 90 percent of the market and charged the highest rates in Europe. France’s national telecommunications regulator recently warned that competition from Free could force the incumbents to shed as many as 10,000 jobs.