Orange customers flee to Free Mobile’s new ultra-cheap plans

Last month we reported on the wireless revolution Iliad’s Free Mobile was leading in France. Now the first casualty reports are in. France Telecom’s Orange(s fte) on Wednesday lost 201,000 net subscribers in a little more than a month, as waves of customers suspended their voice and data subscriptions and signed up for Free’s market-busting all-you-can-eat plans, Mobile Europe reported.

Those 201,000 lost subscribers may not seem like a lot, but keep in mind that European countries don’t grow operators quite as large as they do here in the States. With 27 million subscribers, Orange is smaller than even T-Mobile USA, which has 34 million customers. Orange saw more than 1 million overall terminations in the period, but those were offset by 837,000 new customers. So while Free is definitely having an impact, it’s not as if customers are shunning the major operators now that Free is on the scene.

Free uses its 5 million Wi-Fi access points located in customer homes as the backbone of its network. Wi-Fi is the secret to its low prices, and Free is using that advantage to the hilt, offering unlimited voice, SMS and data plans for a mere €2520 (U.S. $25.50) a month. When customers leave Wi-Fi coverage, they connect to HSPA networks built either by Free or by its roaming partner (which is, ironically, Orange). While on the cellular network, they face 3 GB monthly caps, but even with restricted use, Free’s data prices far undercut anything France’s three major operators are offering.

Free’s momentum may have slowed down considerably since its high-profile launch in January. Orange said that on the day following Free’s debut it received 150,000 number portability requests, i.e., customers moving their phone numbers over to other operators. That rate has since slowed down to 15,000 per day. Orange has also dropped its rates considerably, offering monthly voice and data plans below €10, but Free’s cheapest plan is an astonishing €2 a month.

Image of Eugene Delacroix painting courtesy of the Louvre.