The dynamic energy seen throughout the region is stimulated by the presence of three market heavyweights engaged in merciless competition. In the vanguard is France Télécom-Orange, one of the largest international operators, with a presence in 32 countries worldwide and more than 200 million customers, including 144.5 million cell phone users and 33.5 million 3G users. SFR, the market number two and subsidiary of the entertainment giant Vivendi (which also owns Maroc Telecom in North Africa and the fast-growing GVT in Brazil), has successfully completed its merger with service provider Neuf. The company now has more than 20 million cell phone customers in France, 4.8 million home broadband connections, 140,000 corporate customers (90% of which are CAC 40 listed companies) and 200 service provider customers. The market challenger Bouygues Telecom, which invented the all-in package, is pioneering the unlimited access market with Néo and remains the largest operator in Europe, has recently launched Ideo, Europe's first quadruple-play package, that includes internet, fixed phone, TV and cell phone services. The company serves a total of 10.7 million cell phone customers (79% of whom are on fixed-price deals) and 645,000 broadband customers.
The market dynamic created by these three leaders increased ten-fold when Free (Iliad Group), the company run by Xavier Niel, the French Steve Jobs', secured the fourth French cell phone license in 2010. And there is every reason to suppose that when Free Mobile launches at the start 2012, the inventor of the internet box and the triple-play fixed-price package, which has established itself as the world's biggest IPTV operator within 10 years, will once again rewrite the rulebook. Nearly 1,500 people inside and outside the company are currently working on deployment of a mobile network that is costing Free €1 billion.
Snapping at the heels of these network operators, there are around thirty Mobile Virtual Network Operators (MVNOs), like Virgin Mobile, the market number four with 1.8 million customers. Not forgetting the latest newcomer La Poste Mobile, which is due to open for business in the first half of 2011 on the SFR network, and has set the very ambitious goal of winning between 1.5 and 2 million customers within a 3-4 year window.
From their location in the Paris Region close to industry regulators (including the Autorité de Régulation des Communications Electroniques et des Postes - ARCEP), public-sector decision makers, engineering graduate schools and research laboratories, all these market players are looking forward to a very promising year in 2011; a year that will be marked by two game-changing developments.
First up is the rapid expansion of the mobile internet market, driven by the boom in sales of smartphones and tablet PCs... especially since Paris and its surrounding region have more iPhones per head of population than anywhere else in the world. At France Télécom-Orange, the world's second-largest iPhone vendor, 50% of all new sales are smartphones, and the next wave - tablet PCs - began at Christmas, with Orange selling nearly 30,000 of these devices in December. Faced with this explosion in usage options, French operators are continually reviewing and sizing network capacity to avoid the congestion issues seen in the UK and USA.
As a result of massive investment by Orange, SFR and Bouygues Telecom, the 3G and 3G+ networks are continually reviewed and sized to support the explosion in traffic and offer faultless quality of service in the Paris Region. Even so, French operators are all working on the next generation of mobile connectivity: 4G or LTE (Long Term Evolution). France was therefore one of the first countries in Europe to release digital dividend frequencies, and will also be one of first to allocate them.
There is no real urgency though, since France's current mobile networks are holding up well. Orange expects LTE to arrive in 2012-2013, as the hardware becomes widely available.
The second landmark development for French operators is contactless mobile services; a market in which they have given a commitment to catch up with Asian operators. Building NFC (Near Field Communication) technology into SIM cards makes it possible to incorporate a raft of new services into cell phones to make them the Swiss army knife' of communications by allowing them to function as season tickets, payment cards, loyalty cards, etc.
For several years now, French operators have been conducting experiments in the Paris Region alongside RATP (the Paris Public Transit Authority), SNCF (the national rail operator), banks and others. That process shifted up a gear with the full-scale trial conducted by Orange, SFR, Bouygues Telecom and the MVNO NRJ Mobile at Nice in the South of France in May 2010. Together, they have drawn up technical interoperability specifications, and developed the cityzi' label for contactless services.
The result of this cooperation was that in just six months, cityzi' mobile contactless services had been adopted enthusiastically by 3,000 people in Nice, who were provided with Samsung cityzi phones, according to the AFSCM (the French mobile contactless association).
These outcomes are all the more encouraging for Paris, which was named this January by the French Industry Minister as one of the nine cities to pilot NFC in France. Later this year, Cityzi' will be launched all over France, making this one of the first large-scale rollouts of contactless mobile services in the world. According to Juniper Research, the mobile payment market could be worth nearly $27 billion in Europe by 2014. As soon as a critical mass of customers has compatible phones, this market should generate a constant stream of income for operators.
As early as last December, some very aggressive advertising from Orange promised that half of its smartphone models would offer NFC services from this summer onwards. The operator has set itself the goal of providing at least 500,000 of its customers in France with NFC-compatible phones by the end of the year. It has also announced that it will begin ordering NFC SIM cards for all its contract customers in mid-2011. It's a very proactive approach, especially since an NFC SIM is around twice as expensive as a standard SIM card.
Frédérique de Bast - Chief Marketing Officer
at MWC the 15th and 16th February : +33 (0)66 25 69 21 91