French operators to raise prices for 4G

Soon-to-be-launched 4G is likely to cost French consumers more than mobile-phone services currently available in the market, according to Pierre Louette, the deputy chief executive of France Telecom and head of the main telecoms industry group in France.

In an exclusive interview with French newspaper Le Figaro, Louette said that operators could not bear tax increases, while continuing to invest in their high-speed networks, without raising prices for next-generation services.

Soon-to-be-launched 4G is likely to cost French consumers more than mobile-phone services currently available in the market, according to Pierre Louette, the deputy chief executive of France Telecom and head of the main telecoms industry group in France.

In an exclusive interview with French newspaper Le Figaro, Louette said that operators could not bear tax increases, while continuing to invest in their high-speed networks, without raising prices for next-generation services.

A strong likelihood is that French consumers will be offered tiered rates, whereby customers are charged according to the speed of the data service and how much they are allowed to use it.

France Telecom (Paris, France) is planning to launch 4G services early next year, joining operators in various other parts of Europe and the world that already provide them.

Along with Bouygues (Paris, France) and SFR (Paris, France), it has been forced to slash charges following the entry into the French mobile-phone market of Free (Paris, France) earlier this year.

Already well established in France’s fixed-line broadband market, Free has launched a price war in the mobile-phone sector with damaging consequences for the country’s bigger players, all of which have suffered customer defections to the aggressive upstart.

Tough new regulations have added to the financial pressure on the companies.

It is hardly surprising that operators see the introduction of 4G as an opportunity to raise prices, but Louette’s prognosis may be wishful thinking.

When EE (London, UK), the UK joint venture between France Telecom and Deutsche Telekom (Bonn, Germany), recently published details of the pricing for its 4G service – due to launch this week – it was criticized for charging too much.

A 4G service from the company is to cost about £5 more than a 3G one, even though 4G technology is less costly to operate, analysts have pointed out.

What’s more, EE has a headstart on its rivals in the 4G market of at least six months, and possibly a year, while France Telecom will immediately face 4G competition from Bouygues and SFR, not to mention Free.

In the US, where consumers can choose from several 4G providers, both AT&T (Dallas, USA) and Verizon (New York, USA), the country’s two biggest players, charge the same for their 4G services as for their 3G ones.

Operators in Europe have tried charging higher rates for 4G, but usually before competition has had chance to develop.