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Orange joins free broadband party

Follows Vodafone's lead

Orange today introduced an offering that gives free broadband service to its mobile subscribers in the UK, the second indication this week that mobile operators are using broadband as a way to retain customers.

The announcement follows Vodafone's announcement yesterday that it will start offering broadband services to its mobile customers, first in Germany and then in other markets.

Orange had said previously that it would combine its broadband and mobile services in the UK under the Orange brand. France Télécom owns both Orange and Wanadoo, the brand previously used for its broadband service.

Only Orange customers who subscribe to a post-pay plan of £30 or more per month are eligible for the free broadband offering, which also includes a wireless modem and a VoIP (voice over IP) service.

Mobile operators are keen for customers to switch to post-pay plans because they guarantee a certain level of revenue each month. This offering could help drive that migration, said John Delaney, an analyst with Ovum.

Subscribers must also commit to an 18-month contract, so the deal may also be aimed at retaining customers. "The idea behind it may be for Orange to try to reduce customer churn or improve customer loyalty," said Martin Gutbertlet, an analyst at Gartner.

Customer retention was also behind Vodafone's broadband announcement. "The new reality is that competition is intensifying," Arun Sarin, Vodafone's CEO, said yesterday.

Even though Orange and Vodafone are pursuing the bundled strategy, other mobile operators may not follow suit. Judging from past comments and overall strategies, O2 and T-Mobile are unlikely to start offering broadband services, Gutbertlet said.

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