2011 France - Telecoms, IP Networks, Digital Media and Forecasts

Auction in 2.6GHz band to provide MVNOs will access to LTE

BuddeComm’s quarterly 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. The report includes the regulator’s market data to September 2011 as well as operator data to the third quarter of 2011.

France’s large telecom market has represented about 2.3% of GDP since 2000. Efficiencies by cost-conscious operators have meant that the number of employees in the telecoms sector has fallen steadily in recent years, to some 120,000 by mid-2011. Revenue from the fixed market has been propped up by the broadband sector while fixed-telephony continues to suffer from a combination of price competition and the migration to VoIP and mobile-only solutions.

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.

Investment in the telecom sector has recovered from the dip in 2009, and is expected to reach some €6.6 billion in 2011. Fixed operators’ investments have risen slowly since 2003, and now account for just under two-thirds of total investment, with the bulk of spending going to broadband access networks. Fixed-line investments are particularly strong in the fibre sector where Free (Iliad), France Telecom and SFR are deploying FttH networks in a growing number of cities. Infrastructure sharing based on regulatory models adopted in 2010, as well as public funding, is enabling fibre players to expand their networks deeper into rural areas, and so help achieve the government’s broadband ambitions for 2020. A €1 billion investment has been also been made in Digital TV (DTV), where the Ile de France recently became the latest zone to switch from analogue broadcasts, affecting some 12 million people.

In the mobile sector, Free Mobile secured a roaming deal with Orange which will provide it with national coverage when the service in launched in early 2012. The move will provide a welcome addition to the country’s competing triopoly of players, and propel Free as a serious contender in the market for quad-play services. Free Mobile is also committed to host MVNOs, a market which has shown steady growth during the last few years, and which by mid-2011 accounted for almost 10% of all mobile subscribers. Growth in the MVNO subscriber base is about five times as high as that for MNOs.

The recent auction of the first blocks of frequencies in the 2.6GHz band for LTE and WiMAX services, which raised €936 million, awarded all four MNOs with 20-year concessions. Orange, Free Mobile and Bouygues also agreed to open up their networks to MVNOs.

In the broadband sector, France is among the key markets for providing universal access and for deploying an NGN. 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 bundled packages in Europe. Nevertheless, the number of FttH subscribers, at about 160,000 in mid-2011, is relatively low in proportion of the number of households passed with fibre. This has strengthened the case for operators to share infrastructure and so reduce the cost of rolling out networks.

With DTTV, France recently reached ASO with the last regions being Languedoc-Roussillon and several overseas territories. The DTTV service offers 19 FTA channels, ten premium channels, a number of HD channels and 45 local broadcasters. A further six HD channels are expected to be available during 2012. Areas not covered by the DTTV transmitter network can receive all channels from the DTH platforms TNTSat and Fransat.

Key telecom parameters – 2010; 2012

(Source: BuddeComm)

Market Highlights

• The award to Free Mobile of the fourth 3G licence will introduce a powerful competitor to the established MNOs from 2012. The operator is required to cover at least 90% of the population by 2018, which it can do following a roaming agreement with Orange. 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. Spectrum in the 2.1GHz band, awarded in 2010, will complement those in the 800MHz and 2.6GHz bands which have been assigned for mobile broadband services. The government aims to raise up to €2.5 billion from spectrum sales in all.
• Although the number of FttH subscribers remains low compared to the number of passed homes, this is expected to change rapidly given the low consumer cost of fibre-based services and the plethora of new services which can be accommodated in coming years.
• FT’s revised four-year financial strategy, Conquests 2015, focuses on investing in networks and markets and identifying new sources of growth. The company is concentrating in markets where it is a dominant player while consolidating its position in African and Middle Eastern markets. This strategy has led to a withdrawal from the Austria, Portugal and Switzerland markets.

This report is essential reading for those needing high level strategic information and objective analysis on the telecom sector in France. It provides further information on:

• Market liberalisation and regulatory issues;
• The impact of the global economic crisis;
• Telecoms operators – privatisation, acquisitions, new licences;
• Mobile data market developments in coming years in light of spectrum auctions and new license awards in 2010;
• 3G developments, regulatory issues and technologies including HSPA and LTE;
• Broadband migration to an FttH architecture;
• Historical and current subscriber statistics and forecasts;
• ARPU statistics and forecasts.

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