France: France Communication Profile

Mobile market price competition leads to further consolidation

France has one of the largest telecoms market in Europe, supported by a population of around 63 million. The incumbent, France Telecom/Orange, is one of the world’s major players with interests in markets across Europe, the Middle East and francophone Africa. The telco’s market dominance has been eroded through increasing competition from a number of major players, in turn encouraging it to invest in a national fibre network to improve its network capabilities and consumer offerings.

France has the third largest broadband subscriber base in Europe. DSL dominates broadband access, and though the cable footprint only reaches about 40% of the population the main cableco Numéricable has upgraded its network to compete with DSL, and has itself entered the DSL market through the acquisition of DSL-based market players. Fibre deployment has developed a significant and growing market presence in recent years, supported by an effective regulatory and legislative regime which promotes fibre network sharing and optimises operators’ investment strategies.

France is also one of Europe’s key markets for telecom convergence and bundled services, and has Europe’s largest IPTV sector. The success of service bundles largely rests on fierce competition which has reduced the cost of bundles while raising the quantity and quality of services offered.

The mobile phone market, worth some €15 billion in 2013, has undergone significant changes in recent years. The regulator was keen to promote the entry of a new player, and the subsequent efforts of Free Mobile resulted in price competition between the MNOs Orange, SFR and Bouygues Telecom. SFR became the main casualty of this process, with the operator being sold to Numéricable in early 2014. The deal will go far to introducing further market consolidation and to encouraging operators to provide a full range of services to customers to secure a competitive edge.

Broadband sector

France has the third major broadband subscriber base in Europe. Increase in 2009 has been bolstered by request for high bandwidth applications, considerable investment in fibre infrastructure, and a pro-competitive regulator which has promoted access to France Telecom’s network for new entrants through local loop unbundling. Recent legislation has secured similar access for fibre infrastructure. DSL dominates broadband access, while fibre deployment has become a substantial proposition, particularly in the Paris region. Although the cable footprint only reaches about 40% of the people, the dominant cableco Numéricable has upgraded its network to compete with DSL and has itself entered the DSL market through acquisitions.

This statement assesses France’s fixed broadband markets in 2011, focussing on cable and DSL inclunding developments with related technologies such as ADSL2+ and VDSL2. It reviews the strategies of the principal providers such as France Telecom, Iliad and SFR, considers the regulatory status of LLU, and provides forecasts for broadband penetration to 2020.

Key developments: Broadband subscriber increase remains strong at 8%; DSL subscriber base broaches 21 million; cable sector accounts for 5% of total broadband; success of fibre co-investment deals part operators; fibre sector awaiting killer apps; regulator’s market data to end-2011; operator data to end-2011; market developments into 2012.

Digital Economy and Digital TV

France is of Europe’s key markets for telecom convergence. It has Europe’s major IPTV sector, while a fast-growing number of consumers have adopted bundled offers. The success of this market largely rests on fierce competition which has brought the cost of most bundles to below €30 per month. DSL operators have invested in network upgrades incorporating ADSL2+, while the incumbent France Telecom is deploying a wide-reaching hybrid ADSL/fibre network providing high bandwidth services to meet consumer needs. The consolidated cable sector is now dominated by Numéricable, which manages an upgraded network capable of competing entirely with DSL offerings. Significant evolution has as well been made in France’s digital terrestrial TV sector, with the first region having been switched to digital services. This statement reviews France’s multiple-play and digital TV sectors in 2011, including services such as VoD and IPTV and developments in digital, cable and satellite TV. It as well examines the new regulatory measures relating to digital convergence and applications.

Key developments: IPTV subscriber base continues increase; DTTV ASO reached; trial interactive data broadcasts of using HbbTV authorised; DVB-T2 standard may be adopted by end-2015; Orange TV migrates to single access platform; regulator’s market data to end-2011; operator data to end-2011; market developments into 2012.

Mobile sector

Competition resulting from Free Mobile’s market entry led to reduced tariffs part amount operators. By March 2012 Free Mobile had attracted at least 2.2 million subscribers. The operator has become a critical contender in the competitive quad-play market. The MVNO sector may fasten 17% market share of subscribers by the end of 2012, resulting from far higher increase than that for MNOs.

Key telecom parameters – 2010; 2013

Fixed telephony and Internet

The number of subscriptions to telephone service reached 38.9 million at the end of the second quarter 2007. Over 20% of telephone subscriptions, or 8.7 million subscriptions, are now to voice on broadband service, almost doubling in time(+3.8 million additional subscriptions), while the number of "traditional" subscriptions to dial-up access declined slightly to just over 30 million.

The increase of voice on broadband results primarily from the substitution for telephone subscriptions to dial-up access. Now, 12% of fixed lines, or 3.9 million lines in amount, no longer have a dial-up subscription but only an IP subscription, compared with 4% in June 2006. These lines are either fully unbundled (2.9 million lines had been unbundled at the end of the second quarter 2007, with +1.7 million in year) or have wholesale offers like "naked ADSL".

The rest of the subscriptions to a voice on broadband service (through partial unbundling or "bitstream" wholesale offers) are added to an existing telephone subscription which the customer chooses to keep. So, at the second quarter 2007, 14% of telephone lines support subscriptions to a telephony service (a "traditional" subscription to the PSTN and a subscription to a voice on IP service).

A fraction of the "traditional" telephone subscriptions are now billed to the end customer by an operator other than France Telecom. Resulting from wholesale subscription sale offers, they represented 447 000 subscriptions at the end of the second quarter 2007, compared with 76 000 three months before . Carrier selection, chosen by 5.8 million customers, was down 22.1% over year, declining by 1.7 million subscriptions.

Revenue directly attributable to fixed telephony declined 4.9% in year. Subscription revenue grew 3.6%, due to the price increase on 1st July 2006, which additional than compensated for the decline in the number of PSTN subscriptions. On the other hand, telephone call revenue fell 13.2% because of the sharp decline in the volume of calls made on the PSTN.

Traffic originating on fixed lines remained practically stable. Volumes of calls originating on IP access continued to rise sharply (+75.4% over year during the second quarter 2007) whereas calls made on the PSTN continued to decline. Voice on broadband represented 30.3% of the traffic originating on fixed lines during the second quarter 2007. On average, each customer of VoIP calls 5 hours and 10 minutes per month, 2 hours additional than on a "traditional" phone.

Multiplay packages often include unlimited calling to long-distance fixed lines and to a lot of destinations around the world, which brings new life to these market segments. Close to half of the minutes (46.0%) of calls made to international destinations are now made from phones with IP access. The substitution effect is as well strong for long-distance calls for which 31.9% of minutes are made from IP. On the other hand, calls to mobile phones from IP access phones represent just 11.3% of the fixed-mobile volume.

The number of Internet subscriptions reached 16.1 million at end June 2007, up 13.8% in year. High-speed Internet access continues to grow at a strong annual rate. The number of high-speed accesses rose by 3.2 million (+28.5% in year), reaching 14.2 million at the end of the second quarter 2007. Revenue from high speed was €1 billion at the second quarter 2007 (+34.1% over year). High speed now represents close to 90% of Internet subscriptions and revenue.

Mobile telephony

Mobile operators attracted 52.6 million customers in France at the end of the second quarter 2007-thirds of these purchased flat-rate packages. The increase in the number of mobile telephony customers remained strong during the second quarter 2007, with a 7.1% increase over year, and 3.5 million new customers during this period.

During the second quarter 2007, 154 400 mobile numbers were ported from operator to another, or 37.2% additional than during the first quarter 2007, an increase which can probably be attributed to the simplified procedure put in place on 21st May 2007 for number conservation.

Mobile service revenue reached €4.4 billion during the second quarter, up 6.3%. The average monthly invoice of mobile operator customers (€28.00) was down slightly (0.8%) over year.

Revenue from data services (interpersonal messaging, mobile Internet access services and multimedia services) represented €627 million during the second quarter 2007, just under 15% of total revenue from mobile services. It increased much additional strongly than that of mobile calling (18.6% in year compared to +4.5%), although it was not enough to offset the decline in mobile calling revenue with respect to 2006.

Mobile telephony traffic has been slowing since the beginning of 2007. In year, increase was +6.6%, whereas this traffic had jumped by about 15% in 2006. This decline is due primarily to mobile operators’ on-net traffic, which rose by just 5.5% during the second quarter 2007 over the second quarter 2006, whereas it had grown very strongly in recent years.

Interpersonal messaging continues to be very strong with 4.4 billion messages sent during the second quarter, for a 20.9% increase in year. On average, this corresponds to 28 text messages (SMS) sent per customer per month. Customers with a flat-rate package use this method of communication twice as much on average as customers with a pre-paid card (33 and 17 SMS sent per customer per month respectively). This segment generated €398 million during the second quarter 2007.

Directory Services

The decline in the volume of calls to directory services continued: 35 million calls were made during the second quarter, compared with 41 million a year before , for a 14.5% decline. Revenue from directory services was €42 million, up 12.8% in year.

Note: The figures relating to a particular quarter may be revised from issue to the next as a result of corrections made by operators to their reports. Any discrepancies between annual increase figures expressed as a percentage and the corresponding values are due to rounding.

Fibre and Wireless Services

France is part the top three nations in Europe for fibre deployment, with increase bolstered both by request for high bandwidth applications and by alternative operators keen to build networks independent from France Telecom. Fibre infrastructure has benefited from of Europe’s most far-reaching investment programs, with leading operators such as France Telecom, SFR, Numéricable and Iliad concentrating on the additional expensive but robust FttH rather than the fibre/VDSL2 hybrid networks favoured by most other operators in Europe. The country as well benefits from a regulator which has promoted fibre entirely, and from legislation introduced since 2008 which facilitates fibre access part providers. This statement assesses France’s fibre, wireless and satellite broadband markets in 2011, reviewing the strategies of the principal providers and analysing the regulatory implications for municipal-funded fibre networks and the tightened regulatory regime for the maturing WiFi/WiMAX market.

Key developments: Orange investing €2 billion to provide 15 million households with FttH by 2015; regulator consults on 3.5GHs spectrum for broadband use; almost 1.1 million homes passed for FttH; strong increase in number of homes passed by shared fibre networks; Orange signs joint network deals with Iliad, SFR and Bouygues to expand FttH in rural areas; wireless broadband operators given new transmission site obligations; Paris region commits to €15 million annual investment in fibre rollouts; Nantes extends ‘Omega’ fibre network; regulator’s market data to end-2011; operator data to end-2011; market developments into 2012.

Telecom Market

France has the third major telecoms market in Europe. The incumbent, France Telecom (Orange), is of the world’s major players with interests in markets across Europe and francophone Africa. Despite sector liberalisation, the company still dominates amount sectors though increasing competition from a small number of major players (notably SFR and Iliad) has gradually eroded this lead, prompting it to respond with a range of innovative offers and a wide-ranging NeXT strategy to meet next customer needs. It is as well investing in a national fibre network, largely in response to the activities of smaller players in this market. The mobile sector is dominated by a triopoly of providers with relatively low but steadily increasing MVNO competition, while the vibrant broadband market has seen strong increase as a result of regulatory measures promoting competitor access to exchanges through local loop unbundling, inclunding to fibre infrastructure and ducts.

This statement introduces the key aspects of France’s telecom market, providing precious updated statistics on the country’s fixed network, an analysis of operator strategies in coming years, and a review of the key regulatory issues including the status of number portability, wholesaling and carrier preselection.

Key developments: Declining fixed-line sector drags telecom revenue down in 2011; FT enters Congolese mobile market; ACE submarine cable connecting France with African markets makes landing; Vivendi buys out Vodafone’s interest in SFR; FT initiates Conquest 2015 strategy; Iliad secures roaming transaction with Orange for 2012 Free Mobile launch; telecom investment recovers from 2009 downturn; service revenue falls in 2011 due to contraction of fixed-line sector; regulator considers 10% reduction in LLU charges; FT withdraws from Swiss, Austrian and Portuguese markets; regulator’s market data to end-2011; operator data to end-2011; market developments into 2012.

Mobie Market - Mobile Data Services

The French mobile data market is of the major in Europe, being an increasingly significant part of the in general market as consumers take up a variety of data services. Most investment from the three 3G network operators during the last years has focussed on upgrading networks to provide HSPA and thus provide sufficient capacity to exploit consumer use of mobile data services. These numerous services have become additional popular following the introduction of unlimited data offerings and the cheaper and additional widespread availability of capable handsets. This statement provides key statistics on the French mobile data market, including the increase of mobile data services such as SMS/MMS and mobile TV, and the status of network infrastructure such as HSPA and LTE. In the statement we as well provide an analysis on the major players and their strategies in an increasingly competitive market, inclunding 3G and mobile TV forecasts to 2015.

Key developments: Mobile data market revenue showing steady increase; MNO m-commerce platform Buyster takes shape; SMS use shows 34% annual increase to Q4 2011; SFR to launch LTE in 2013, aiming for 88% HSPA+ coverage at 21Mb/s by end-2012; Orange and Bouygues Telecom planning LTE launches; first stage in 4G licence auction brings in €936 million; TDF abandons DVB-H for B2M; regulator’s market data to end-2011; operator data to end-2011; market developments into 2012.