Arcep reports on status of broadband in France

POLICY

French telecom regulator Arcep recently published its report on France’s (fixed and superfast) broadband retail and wholesale markets. This features a ‘scoreboard and outlook’ for public consultation along with an analysis of wholesale products and development paths for 2017 – 2020.

Richard Toper

CEO OF SETICS

“According to Arcep, when it comes to superfast broadband in France, 14.8 million homes are passed and 4.2 million are subscribing”, explains Richard Toper, CEO of Setics, closely involved in executing the broadband plan. “Among these, 6 million homes are passed through FTTH (FTTP) and 1.6 million are subscribers of a FTTH operator. This development is described in the ‘Plan France Très Haut Débit’ (France Superfast Broadband Plan).”

 

“This specifies a number of points, including  € 20 Billion investment in 10 years and priority for FTTH. In the ‘private initiative area’ (covering 57% of the population living in densely and very densely populated areas - 10% of the country’s surface area) telecom operators are financing, rolling out, operating and maintaining FTTH networks. In the ‘public initiative area’ (43% of the population, medium density and rural areas, 90% surface area) local authorities are setting up Superfast broadband networks operated by wholesale operators (Open Access). Financing is shared by the local authority, French state and private companies (PFI or PPP).”

 

 

Satisfying demand for fast access

 

The regulator has projected that three years from now, seven to eight million additional households and businesses in France would have access to FTTH, supplied by at least two operators. As FTTH networks are gradually deployed, improvements to connection speeds and available services countrywide are required. The document examines solutions that could satisfy demand for superfast access in the near future and investigates actions Arcep could take to improve and expand this ‘toolkit’.

The regulator is planning to introduce changes to the asymmetric regulations governing incumbent carrier Orange's business market wholesale products. Arcep also plans to impose an obligation of non-discrimination on all Orange wholesale offers for the capacity services market.

 

 

Further key findings

 

Competition in the residential retail market has been marked by the merger of SFR and Numericable. Player rankings are almost the same as in 2014, with Orange maintaining its 40%-45% market share, but significantly increasing its superfast access market share. There are 2,8 million >100 Mb/s subscribers, growing of 38% between 2015 Q1 and 2016 Q1.

 

The retail market for business customers has become very concentrated since Numericable took control of SFR. Orange and SFR-Numericable have a combined market share of over 60%. Contrary to the residential market, fibre adoption is slow (15% at 2015 Q4).

 

In the wholesale market for superfast local loops, the gap has widened between Orange and other operators. This reflects the investments the incumbent has made in recent years – Orange markets retail products to over 90% of households eligible for FTTH. Regarding optical local loops, the number of homes passed has steadily grown from 3.1 million in 2014 Q1 to 6 million in 2016 Q1. In the wholesale market for premium businesses services, Arcep continues to designate Orange as the operator with Significant Market Power (SMP).

 

For 2017 – 2020, Arcep aims to ensure regulation is in place that stimulates a steady pace of investment, and enables the widespread deployment of these networks and sufficiently strong competition across the country. Specifically adjustments and additions to the regulatory framework governing very high density areas are planned.

 

 

Investments in infrastructure, synergies and innovation

 

Access to Orange civil engineering infrastructures is critical for deployment of a shared optical local loop, so Arcep has set out several options for operational improvements and increasing access products' application versatility.

 

To allow all business customers to upgrade to fibre in a sufficiently competitive marketplace, at least one new player-investor with a national footprint needs to join the market, according to the regulator, who are exploring market analysis tools required to achieve this.

Two consultations were just being held in France by Arcep: one on connectivity for businesses and the emergence of a mass market for SMEs and one on investment in and transitioning to optical fibre, notably through changes to copper pair pricing.

 

By November, draft decisions will be published for consultation then submitted to the Competition Authority for feedback, before the European Commission is notified.

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“The IT revolution offers our society a unique opportunity to significantly enhance productivity, if implemented properly,” explains Wolter Lemstra. “Telecom and communications infrastructure – specifically fibre broadband - play a vital role in this. Infrastructure-based competition is vital to developing broadband access, but we should also recognize the limits of the market-driven model. For this reason, governments have a vital role to play wherever commercial models fail to supply broadband.”

 

“Research also suggests that the economic benefits of broadband will only materialize if investments in ICT hardware and software are complemented with investment in human capital - skills development - and the reconceptualization of business models and business processes.”

 

Wolter first encountered FTTH in 1991, during a pilot carried out by telco incumbent KPN in The Netherlands. At the time, the obvious choice was to use existing copper networks and avoid the expense of laying new cables in the ground. The data rates fibre offered seemed excessive. “Today, however, they’re absolutely necessary. Video is one important bandwidth-hungry driver. Not just watching or downloading content, but also applications such as teleconferencing or security surveillance. The Internet of Things may have modest speed requirements, but there are billions of them. Moreover, upcoming applications such as remote surgery, that need extremely low latency and high data speeds, will increase the need for fibre even further. Trying to extend the life of copper networks is not a long-term solution.”

 

“Of course, the provider makes the final decision regarding the choice of technology, but governments have a duty to inform and educate and stimulate the uptake of the most future-proof solution. If the government finances a network, for example in a rural area, they can decide which technology is most appropriate. Across Europe, we see great diversity in alternative approaches to using fibre, based on initiatives by municipalities, non-telco entrepreneurs, cooperatives and user communities. We advise national, regional and local governments how to leverage and facilitate these initiatives.”

 

“In several Central and Eastern European countries which had little or no copper networks to start with they went directly to fibre. And once fibre is available, people tend to use more bandwidth. Today, people in Japan and Korea use far higher data rates than Europeans, but interestingly if current trends continue, it looks as if that gap will be closed by 2020.”

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All rights reserved.