REGISTRATION DOCUMENT AND FINANCIAL REPORT - Iliad

6. OVERVIEW OF THE GROUP’S BUSINESS
6.1 PRINCIPAL ACTIVITIES
The Group has decided to reinforce its peering capabilities in Europe by being present on several new exchange
points.
In particular, the Group has entered into IRU agreements for optic fibers to connect Paris to London, Amsterdam,
Brussels and Frankfurt.
Iliad has also reinforced its peering capabilities on the East Coast of the United States, and now boasts two
transatlantic 10-Gigabit connections.
International transit
At December, 31, 2007 for international transit, Free used the services of two transit service providers offering
bandwidth capacity of 40 Gigabits per second: Level3 and Teleglobe.
Server platform
All Free’s servers run on a Linux operating system, which is well-established and used by many Internet-based
companies.
Free’s Linux-based infrastructure consists mainly of Dell 1U PC servers installed at its various PoPs. Free uses
Network Appliance file servers for data storage.
6.1.4 Description of the Group’s principal activities
6.1.4.1 The Broadband segment
6.1.4.1.1 Free
Free is the third largest broadband Internet access provider in France and one of the few such providers to have
become profitable through the provision of ISP services. Free first posted a profit in April 2001, only 24 months
after the start-up of its business.
Today, Free has four different Internet access offerings, characterized by their simplicity, attractive pricing and
recognized technical quality. They also provide tools allowing subscribers to take full advantage of the Internet’s
many features, including portals, search engines, email, personal website construction tools and account
management systems. These four offerings consist of the “Pay-as-you-go” service, the “50-hour plan” and Free’s
broadband and high speed broadband offerings.
Free initially based its growth strategy on the provision of non-subscription access to the Internet
(“Pay-as-you-go” access) offering a limited range of content. Its marketing strategy was based on minimizing
advertising expenditure and emphasized the simplicity and low cost of the offering. This strategy was successful,
with Free now claiming over four million user-created email addresses.
After completing the roll-out of its telecommunications network and interconnecting with the France Télécom
network in April 2001, Free was in a position to control the cost structure of an offering based on Internet
connection time. It therefore launched an attractive and profitable dial-up package, charging a fixed rate of
€14.94 for 50 hours of Internet usage per month. Free has capitalized on the different nuances of its brand name,
transforming it from a name implying that the offering is free of charge into a name associated with high-quality
paid services and the freedom offered to users of these services.
This new brand image was enhanced with the launch in October 2002 of Free’s ADSL broadband offering for
€29.99 per month. Through the use of its network and by building on its experience in dial-up offerings, Free has
developed a high-quality broadband access offering which is attractively priced and, where possible, makes the
most of the opportunities afforded by the unbundling of the local loop.
Free’s offerings are pertinent to all Internet user segments and have different maturity profiles, with some
subscribers migrating from one offering to another (such as from the “Pay-as-you-go” service to the “50-hour
plan” and from the “50-hour plan” to the Free broadband offering). The downturns in the “50-hour plan” offering
and the “Pay-as-you-go” offering are more than offset by strong growth in the broadband offering.
30 - Iliad – Registration Document 2007