France Telecom wants to develop relationships with fixed providers such as cable operators across Europe in a bid to offer quad-play bundles of fixed, mobile and TV services in more of its markets, strategy chief Elie Girard told Bloomberg during an informal meeting this week.
According to the report, the French operator is keen to mimic the relationship between Verizon Wireless and Comcast in the United States which sell each other's services under their own brands. Indeed Verizon Wireless has teamed up with several different cable operators in the U.S. market in order to market service bundles across the country.
"When you look at the addressable market, it's shrinking by several points every year," Girard told Bloomberg. "You have this idea of trying to sign deals. Look at what Comcast and Verizon have done. One needed mobile. One needed fixed, so they cross-sold to each other."
France Telecom, which will fully adopt the Orange brand as its company name starting in July, already sells converged fixed and mobile services in France under Orange Open, and recently launched a new range of low-cost mobile services combined with fixed Livebox plans under the no-contract Sosh brand.
The French operator now wants to replicate its France model elsewhere, using cable operators to supply the fixed services in return for an Orange mobile plan to avoid expensive acquisitions. However, Girard told Total Telecom that a lack of regulatory support often makes it difficult to bundle together fixed and mobile products.
"Where we are [the] alternative operators, we do not enjoy a symmetrical situation," Girard told Total Telecom. "It's a double penalty."
Girard cited Romania and Belgium, where France Telecom only offers mobile service, as the top candidates for potential relationships with cable operators. However, he said regulatory issues still needed to be addressed in these markets to allow the provision of wholesale services at prices that would allow Orange to compete with existing players.
Like other operators in Europe, including Vodafone and Telefónica, France Telecom sees multi-service bundles as a way to repair the damage caused by strong competition from low-cost providers and over-the-top services. Indeed, Vodafone recently signed a deal to use Deutsche Telekom's network in Germany, and is still rumoured to be evaluating a purchase of Kabel Deutschland.
In Spain, both Vodafone and Telefónica are fighting back with their own quad-play plans as users churn to the cheaper mobile services offered by fixed providers acting as MVNOs. According to Reuters, Spain's two largest mobile operators are set to face more competition ahead as other companies launch MVNOs to attract users with cheap deals.
Meanwhile Europe's operators are increasingly looking across the Atlantic to see how their U.S. counterparts are tackling today's competitive challenges. And with good reason, according to a recent report from the GSM Association; in 2012 the average European consumer spent $38 (€29) per month on a mobile subscription, compared with $69 in the U.S.
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