STRASBOURG, France, June 6 (Reuters) - Bouygues Telecom plans to offer super-fast 4G mobile services to at least 40 percent of France’s population within four months, as the race heats up among operators to build the new networks.
Europe’s big telecom operators are hoping the move to 4G will help them claw back pricing power after several years of declining revenue and tough competition.
But it remains to be seen whether the strategy will work. Consumers may not be ready to pay more and smaller operators eager to win share are likely to cut prices.
“We want to offer 4G to more than 25 million customers by October,” said Richard Viel, deputy CEO of Bouygues Telecom, at a press conference to launch the service. “And we will be the only ones with such large coverage at that date.”
Bouygues, the third-largest operator behind France Telecom and Vivendi’s SFR, has a head start because it gained authorisation to re-use old mobile spectrum for 4G starting on Oct. 1.
As a result, it will have broader coverage than rivals more quickly, and will also be the only operator able to offer Apple Inc’s iPhone users 4G speeds as of October.
SFR and France Telecom are also racing to put up 4G mobile antennas and cover France’s biggest cities. The two operators are already selling 4G services, but so far have limited coverage, so are initially giving it away for little price premium before raising prices when coverage is wider.
France Telecom is aiming to cover 30 percent of the population by the end of the year.
Like Bouygues, Britain’s largest operator EE (owned by France Telecom and Deutsche Telekom ),launched ahead of competitors in October because it is re-using 1800 megahertz spectrum for 4G.
EE has attracted over 500,000 subscribers in the first seven months and is charging a premium of between 10 and 20 percent for the service. It said on Thursday it would offer the service on pay-as-you-go and shared pricing plans.
In France, the three larger operators have vowed to hold the line on 4G pricing, because they see it as a way to combat the price war underway since Iliad’s Free Mobile launched its low-cost mobile service in January 2012.
Free Mobile has taken about 8 percent market share and touched off a decline in mobile prices of about 12 to 15 percent last year, and prices are still falling.
Bouygues will start selling 4G services at 29.99 euros a month for 2 gigabytes of data without a discounted phone and at 39.99 euros with a discounted phone.
It aims to keep 4G prices some 5 to 10 euros more expensive than old mobile plans, but admits it will have to react based on competitors’ moves.
The group covers 10 cities in 4G now and aims to have 100 by October.
Jean-Paul Arzel, head of networks at Bouygues, said it would take until early next year to see the real impact of 4G on the market.
“The fight for customers will be intense, starting this fall and through Christmas, and we should see whether the effort to raise prices is working by early next year.”