Orange has announced that it will resume its investment in a national fiber network in France. This comes after ARCEP recently clarified the details of the regulatory framework that would apply to the deployment of very high-speed broadband. France is now set for widespread deployment of FTTH in urban areas following a lengthy period of consultation.
The challenge for Orange is to recoup its substantial investments in FTTH; there is little room for a price premium in one of Europe’s most competitive broadband markets. Outside urban areas, the framework and conditions for rolling out FTTx have yet to be defined.
Five-year investment plan prioritizes high-density areas for high-speed broadband rollout
Orange plans to invest around €2 billion over the next five years in Zone 1 – i.e. densely populated areas. Orange will continue its existing investment in Bordeaux, Grenoble, Lille, Lyon, Marseille, Metz, Nantes, Nice and Toulouse, then in 2010 it will start rollout in the Paris region and new cities such as Cannes, Montpellier, Orleans, Rennes, Strasbourg and Toulon.
Throughout 2009 the funding of high-speed broadband networks has been a topic for heated discussion in a number of markets, including the UK and Australia. In France the stakes are particularly high, as all of Orange’s main competitors will be rolling out FTTB/H. Added to this, ARCEP’s favouring of multi-fiber deployment in high-density areas has meant that all operators need to cooperate. The approval of a regulatory framework for fiber deployment in very densely populated areas should see deployment start to ramp up.
The approved regulatory framework for fiber deployment in densely populated areas mandates multi-fiber deployment and guarantees technology neutrality for all service providers. This means that any service provider deploying in-building fiber will be obliged to install additional fiber if another service provider makes that request and agrees to share the installation costs. This agreement must be reached at the beginning of a project.
The regulatory obligations that will apply are expected to be in line with the current draft of the EC Recommendation on the (regulatory) approach to NGA, which suggests that multi-fiber deployments could result in a competitive outcome and as such ARCEP would not need to impose a wholesale bitstream obligation.
Previously Orange had provided competitors SFR and Iliad Group’s Free business unit with a wholesale proposition for access to ducts. Although competitors often used the same subcontractors as Orange, they were not permitted to install fiber at the same time as Orange.
Both competitors claimed that Orange had dragged its feet over local loop bundling over ADSL, and they did not want to see a repeat with FTTH. After two years of lobbying, ARCEP has set out clear conditions for FTTH network infrastructure sharing. The decision puts France ahead of neighbors such as the UK which are yet to determine the rules for passive access.
In fact, fiber broadband offers have been commercially available in selected areas for a while now, but take-up remains disappointingly low. By 3Q09, SFR, Free and Orange had only amassed around 55,000 subscribers between them – a poor showing next to cable operator Numericable’s tally of 195,000 FTTB subscribers.
Growth will ramp up once fiber becomes ubiquitous and Orange starts a bigger marketing push. But it is not going to be easy for Orange to charge a premium for fiber-based broadband. Iliad’s Free, SFR and Numericable have resisted veering away from the symbolic €30/month for triple-play.
Orange has stated that it is looking for co-investment with other operators and local authorities to assist with its rollout in Zones 2 and 3, and expects to cover all 95 departments in France plus the three overseas departments by 2015.
The government’s recent pledge of €2 billion of funding to accelerate FTTH deployment in the less densely populated areas of France is welcome news, but falls short of what France’s regions have been pushing for.
Public-private partnerships have served France’s regions well by ensuring a healthy supply of first-generation broadband; they will play an even more crucial role for NGA, but there is still uncertainty surrounding the regulatory and commercial standpoint.