And to think how easily  “29.90 Euros” rolled off the tongue…

French cable company Numericable announced it will launch a €19.95 Triple Play, adding more pressure on an already irrationally priced broadband market. The €19.95 plan will offer all DTT and DTT HD channels, up to 30 or 100 Mbps internet access, depending on the area, and unlimited phone service nationally and to 53 international destinations

The pricing move was not unexpected.  In fact, we predicted it nearly two years ago. Rather, Numericable’s €19.95 deal is the latest salvo in a market that seemed to have reached some sort of stability at the €30 level—a price point originally set by Free (Iliad). Now it is Numericable, owner of its own network and slave to no-one, that is setting the rules.

Unless competitors Orange, SFR and Free can come up with a differentiation strategy –and quickly-- they will have no choice but match or beat the offering.  Fiber might be an answer, but consumers shouldn’t hold their breath.

Service Providers in France find themselves at a critical juncture in a commoditizing market.  Offerings in the market are becoming increasingly indistinguishable, and providers are doing relatively little to differentiate effectively.  As I have written before, France is following a pathway that can only lead one way: lower prices.  While consumers will ultimately benefit, it is likely that this latest price offensive will spark further consolidation in the market, and will cull out providers unable to innovate.

Broadband Evolutionary Path

Source: Strategy Analytics, “Triple Play Chaos: Lessons From France's Hypercompetitive Broadband Market, “ 2007

If the Telcos take the bait, and find themselves in a price war with Numericable, there is only one way to go—and it’s not the right way. 

Perhaps they ought to think about it as if their very lives depended on it.