How Orange hopes to benefit from a future of free calls and messaging

When your historically core paid-for product is being offered for free by upstart rivals, what’s the solution? Try to beat them at their own game.

That’s what’s happening with voice and SMS – traditionally the big money-spinners for telcos, but now irrevocably disrupted by the likes of Skype, WhatsApp and Viber. We’ve already seen T-Mobile USA hit back with Bobsled and Telefonica with Tu Me, and now it’s Orange’s turn with a new iPhone app called Libon.

The French telco has already rolled out a predecessor to Libon in the form of visual voicemail service VoiceFeed. 18 months after that launch, Libon incorporates the same functionality, plus free messaging and high-definition, IP-based voice calls.

Libon lacks Bobsled‘s desktop browser integration and Tu Me‘s photo and location-sharing capabilities, but Orange is hoping it takes off. And Giles Corbett, head of the Libon skunkworks division at Orange Vallée R&D, is pretty frank about why.

“The idea here is straightforward – Orange is about providing outstanding communications services,” he told me. “Our users expect to be using the best services and, if we’re not providing the very best, they’re one click away from switching to another service. We need to go build up services, put them in the hardest, most competitive market and see if we can make them fly.”

Now, bear in mind that, as with Bobsled and Tu Me, Libon is carrier-agnostic and available to pretty much anyone (well, anyone in 90 countries, to be precise). Also, the messaging and Libon-to-Libon calls are free.

So, how precisely is Orange supposed to benefit from this, and why would customers opt for Libon?

A winning strategy?

Well, not all of the service is free. As with its rivals, Libon charges for calls to landlines and mobiles, meaning Orange mainly needs to beat Skype et al on price. The carrier is also rolling out a premium version of the app, which removes ads and includes 60 minutes of free calls to those old-fashioned, non-IP-based phones.

What’s more, Corbett suggested, Orange will use that premium side of Libon as a value-add for Orange customers. First to benefit will be the users of Orange’s low-cost French subsidiary Sosh, who will get a trial of “unlimited free international calling to landlines and mobiles in European countries via Libon”.

“Any Orange country [operator] can take Libon and create special offers around it,” Corbett told me. “That does require a level of technical integration simply to be able to find a straightforward way for him to be presented with the Orange offer if he is an Orange customer. Over time we will be exploring many other integrations around voicemail services.”

“[Carriers] need to remain relevant. Orange will do anything to remain relevant in that communications experience, to maintain the relationship with the end user so they remain [loyal] to Orange… All we’ll see is a transition away from people billing for minutes to people billing for access.”

I’ll be honest: I find it hard to get my head around this strategy – Libon, Tu Me, Bobsled, the whole thing.

I understand that the industry has been massively disrupted, and that the carriers are trying to hook users to their respective brands. But, given that none of them are the ones doing the disrupting, it’s hard to see this as a winning approach. Users are already on Skype, Viber and WhatsApp, and they need a reason to explore other options.

And to make matters worse down the line, it will be difficult for a service such as this to make money when the people customers are calling are also using IP telephony services, rather than the phone numbers we take for granted today.

Until we see the carriers leading the internet services pack, rather than playing catch-up, it’s hard to see the mobile operator of the future doing much more than competing for who can offer the best flat-rate data access.