The Mobile 15: Our picks for the most innovative companies

Free Mobile

CEO: Maxime Lombardini (CEO Of parent company Iliad)

Number of employees: 6,300 for Iliad (1,400 new recruits since June 2011 for the launch of Free Mobile)

The business:

Free Mobile is the new wireless communications arm of French broadband ISP Iliad.

The backstory:

After 12 years of turning France’s broadband market on its head, Iliad founder and chief strategy officer Xavier Niel decided it was now time to do the same to the French mobile market. In January, Iliad took on France’s big three with the launch of Free Mobile, which immediately set off a price war and within five months lured in 1 in 20 of all French mobile subscribers.

The innovation:

Free’s innovation comes in both pricing and technology. It’s offering a basic voice and data plan for a mere €2 (US $2.50) a month, while its premium service gives customers unlimited voice and text and 3 GBs of 3G data for only €20.

Such pricing structures would be unsustainable for any carrier, but with the help of Wi-Fi, Iliad is hoping to drastically reduce the cost of delivering mobile data. The ISP has turned its broadband customers modems into Wi-Fi access points accessible by any device on Free’s network. The result is a community hotspot network with 4 million nodes throughout France.

The plan:

Free’s strategy is to change the economics of mobile data by driving traffic away from pricey macro-cellular networks and onto Wi-Fi and eventually femtocells maintained by its customers and partners. It’s an ambitious plan but not one without risks. Since its broadband customers are primarily in residences, Free doesn’t have consistent Wi-Fi coverage in all the public venues where its customers congregate. It’s also dependent on competitor Orange to provide 3G coverage in the large swathes of the country where it hasn’t built 3G. Though it’s only been two quarters, Free Mobile is, at this point, a money- losing service.

If Free fails in its plan to shift the bulk of its traffic to Wi-Fi, its grand experiment in wireless may wind up being nothing more than a failed experiment.