2010 France - Telecoms, IP Networks, Digital Media and Forecasts

France pursuing competitive fibre rollouts to 2019

BuddeComm’s annual publication, France - Telecoms, IP Networks, Digital Media and Forecasts, provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in one of Europe’s key markets for telecom services and innovation.

France has the third largest telecom market in Europe, behind Germany and the UK, representing about 3% of GDP. Telecom revenue is expected to continue to recover slightly in 2010, having fallen in 2008 in part through unfavourable economic conditions, and show similar moderate growth during the next few years, tempered by the effects of regulated tariffs on mobile termination rates and roaming, competition among players, as the continuing decline in voice revenue.

Investment in the sector has nevertheless weathered the troubled liquidity markets, having risen steadily year-on-year, though as a proportion of revenue it remains among the lowest in the EU. Pressure to maintain the investment momentum during the next few years will partly come from the government, which is keen to see its broadband strategies come to fruition.

Overall investment in the telecom sector is estimated to be around €6.6 billion in 2010, only slightly higher than in 2008 and 2009. Fixed-line investments are particularly strong in the fibre sector where Free (Iliad), France Telecom, Numéricable and SFR are the main players. Investments by mobile network operators are concentrated in software upgrades for LTE and similar technologies which can support mobile broadband services. Investment will be encouraged by favourable terms, including 20-year licences and no requirements for geographical coverage or deadlines for network roll-outs.

For the next decade telecoms strategies and regulatory policies will largely be guided by the government’s Digital Plan 2012, which includes measures to fill the gap in broadband coverage, increase broadband penetration, license frequencies for 3G use, stimulate the deployment of DTTV, and allocate digital dividend spectrum for mobile broadband. The regulator’s 2010 report has in addition promoted the extension of FttH deep into the regions and into rural areas.

In the mobile sector, Free Mobile secured the fourth 3G licence in mid-2010, and its proposed launch in early 2012 will provide a welcome addition to the country’s competing triopoly of players. Free Mobile is also committed to host MVNOs, a market which has shown steady growth during the last few years, and which by the end of 2010 accounted for about 7% of all mobile subscribers. Growth in the MVNO subscriber base is about five times as high as that for MNOs.

France has progressed steadily with the ASO schedule thus far, yet although the last region to complete switchover is expected to do so by the end of 2011, the public body tasked with helping the public adopt the digital broadcasting system, France Tele Numérique, has pressed for its postponement to 2013 or 2014.

One of the main broadcasters, Canal +, has its own timetable and may bring forward ASO by several months, while early 2010 the seven main legacy broadcasters agreed to a simultaneous ASO for signals carried by Eutelsat to coincide with last regional switchover.

In the broadband sector, France is among the key markets for providing universal access and for deploying a national All-IP network. With four main fibre players (including Numéricable, which relies on fibre backhaul for its cable infrastructure), France is among the most competitive markets globally, with the result that consumers enjoy some of the cheapest prices for triple-play and quad-play packages in Europe.

Nevertheless, the number of FttH/FttB subscribers, at about 90,000 in mid-2010, is a relatively low proportion of the number of households passed with fibre (910,000), and this has strengthened the case for operators to share infrastructure and so reduce the cost of rolling out networks.

Key telecom parameters – 2009 - 2011

(Source: BuddeComm)

Market highlights:

• The award to Free Mobile of the fourth 3G licence will introduce a powerful competitor to France Telecom and other major players for convergent services, including mobile voice and data as well as IP-delivered services based on DSL and fibre networks. The operator is required to cover at least 90% of the population by 2018, while refarmed 900MHz spectrum will allow Free Mobile to enter the mobile market from January 2011, with a licence to run until 2034. With the extension of existing 3G licences to 2019 conditions have become more favourable for further investment in networks and technologies.
• LTE trials have continued apace, with all MNOs having secured technology partners during 2010. Spectrum in the 2.1GHz band, awarded in mid-2010, will complement that in the 2.6GHz band to be used for mobile broadband services.
• The number of FttH subscribers is very low in proportion to the number of passed homes but this is expected to change rapidly given the low consumer cost of fibre-based services and the anticipated plethora of new services which can be accommodated on the networks in coming years. By mid-2010 there were some 40,000 fibre rollouts by alternative carriers using a wholesale offer from the incumbent, including those from some 20 municipalities. However, the number of connected homes, at some 450, remains small.
• The government has committed itself to investing €4.5 billion to support the rollout of NGNs. For now, the government is concentrating on several priorities, including education, research, the digital economy, and industry. Broadband infrastructure alone will receive €2 billion from public funds to enable up to 70% of the population to access at least 100Mb/s services by 2019. Public funding is expected to be supplemented by up to €4 billion from the private sector, and together this investment will guarantee France’s position among the leading markets in Europe for IP infrastructure.

Henry Lancaster
November 2010

Data in this report is the latest available at the time of preparation and may not be for the current year.