Futur Garçon Un: Secrets of France’s Internet Billionaire

Apologies for the radio silence: Future Boy was on assignment in Paris, meeting a surprisingly large number of web entrepreneurs. I say surprising, because FB — or to give him his Parisian name, Futur Garçon — did not expect to find a lot of high-tech startups in the City of Light. Great food, fashion and Gallic snobbery, oui; hard-working, forward-thinking online businesses burning the midnight oil, non.

But that’s one stereotype FG was quick to dispel. It turns out that Paris is becoming the European answer to Silicon Valley, with a critical mass of hot tech companies that are gaining international following — and international funding. More importantly, its Internet infrastructure is light years ahead of anything the U.S. can offer. For a mere thirty euros a month (about $45), you can have DSL service delivered to your home and office at a blazingly fast 1.25 gigabits. But wait! There’s more! You also get a wi-fi router, all the TV channels you can eat delivered over the same pipe, and free phone service to 70 countries. (It’s VOIP, but nobody cares for such acronyms — all your average Frenchman knows is that you plug your phone into the back of your DSL box, and you’re done.)

Amazingly, this is all the doing of one entrepreneur — 40-year-old Xavier Niel, an unassuming, constantly smiling man whom FG met one Friday at his headquarters near St. Augustin in Paris’ trendy 8th Arrondissement. Niel is the founder of Iliad, the company that sells that astonishingly cheap service described above, which is called (ironically, but not too ironically) “Free.” As he sat down in a combination conference room and living room in Iliad’s basement, the better to demo its product, Niel told FG he ran the most profitable company in the French market. Astonishingly, the entire payroll is financed with a mere 4% of its revenues. Free has 3 million subscribers, rising rapidly — and is giving France Telecom, the stodgy state-sponsored market leader, a run for its money.

How can that be? Niel is offering a top-of-the-range data service, every form of communication you could possibly want except cellphone coverage (though he plans to expand into that too), for a bargain basement price. Indeed, Niel says he is often visited by representatives of U.S. cable and wireless companies, who tell him they would charge their customers three times what he’s charging for this service — if they had the infrastructure to offer such a thing.

Niel not only refuses to go above the 30 euro threshold, but he also keeps adding services at no extra cost. For example, you can now plug a video camera into the back of your Free box, and presto: you’re broadcasting your own TV channel to other Free subscribers. Price? It’s all part of your 30 euro bill. What gives?

First of all, Iliad keeps its equipment and software costs low by building everything itself. Niel was proud to show FG the ramshackle, do-it-yourself innards of the boxes the company uses. “We’re like Apple without the cool design,” he says. He called the remote control that comes with the Free box “the least beautiful but most powerful remote in the world.” Iliad engineers wrote all the software the company runs on. “The French are pretty good at software,” he says, citing the educational system’s emphasis on science and technology.

His entire optical fiber system runs on two Cisco routers. Back in the dotcom bust of 2001, Niel — then a small businessman — bought up tons of optical fiber infrastructure for a song. Nobody thought it was the future any more. They were wrong, and Niel was right — as he seems to be about many things, including keeping prices dependably low.

Now Niel is spending 300 million euros building yet more optical fiber, overcoming the “last mile” problem, and running it direct into every building in Paris via the city’s sewers. He expects the project to be complete, and Paris to be an all-optical fiber city, by the end of 2009. He even expects people to start using their ultra-speedy service to run their own Internet Service Providers out of their apartments. He doesn’t mind the competition. “Fiber is light,” he says. “There’s nothing speedier. People may still be using this system in 500 years.” Optical fiber in the sewers — a perfect metaphor for the digital renaissance currently taking place in the City of Light.