France Telecom Plans FTTH
Only days after two separate fiber network announcements were made by French politicians, Orange (NYSE: FTE) has announced a fiber-to-the-home (FTTH) pilot that will go live within the next few months. (See FT Launches FTTH Trial).
The French operator is to hook up a few thousand homes in Paris and six cities in the densely populated Hauts-de-Seine département to the west of the French capital. It says it needs to determine the technology's capabilities and to test customer reaction to services such as high definition TV (HDTV), video on demand (VOD), multi-user VOIP and videoconferencing, and online gaming, among others.
The carrier says it's runnning a FTTH pilot program now because, while DSL technology and its copper access lines can cope with current customer demands, increasing access bandwidth requirements will make that traditional connection redundant in the future.
The news sent the carrier's share price down €0.32, about 1.6 percent, to €19.22 on the Paris Bourse.
The announcement comes just days after the Mayor of Paris announced plans for a municipal citywide fiber network that will be put out to tender at some point in the coming months. Separately, the French president, Jacques Chirac, voiced his ambition to fiber up the whole country. (See Paris Plans FTTH Network and Chirac Loves FTTH.)
So is this a knee-jerk reaction by a carrier not wanting to get left behind in the broadband race? After all, it is already suffering intense competitive pressure in the high-speed access market. (See FT Warns, Europe Quakes.)
Not all, says France Telecom spokesman Romain Battle. "This is not a reaction to any political announcements. We are just talking about the technical possibilities for the future, and we need to try out the technology now. The key element is time to market -- we need to be ready to meet our customers' needs," says the spokesman.
And is FT hoping this will win it a starring role in the Mayor of Paris's plans to hook up his city? "It's not related, though of course we want to be the leader in the market," says Battle, adding that Alcatel (NYSE: ALA; Paris: CGEP:PA) and "numerous other technology partners" will be involved in the pilot. No further technical or financial details were available.
The carrier also says in its official statement that, following the initial pilot, it will "be able to ramp up its pilot programs to cover other regions in France or abroad by 2007." Abroad? "This is currently under discussion," says Battle. "We may extend the pilot to other countries, but we haven't named any."
Other countries where the carrier already offers broadband services include Poland, Spain, the U.K., the Netherlands, Algeria, Morocco, Jordan, Mauritius, and Madagascar.
Quite where these plans will leave France Telecom in the broadband game is unclear, though, says Daiwa Securities SMBC Europe Ltd. analyst James Enck. He notes that FT will be feeling the heat from Parisian FTTH startup CiteFibre , which is planning to provide triple play services across 100-Mbit/s connections, and from cable player Noos , which is conducting FTTH trials in the French capital.
France Telecom "had to be seen to be doing something," given all the other projects and announcements made recently. "Maybe FT is hoping to keep its hand in the decision-making process by lobbying for a collaborative effort" with other access players that will want a piece of the national and Paris municipal projects. "It's hard to try to unravel all the layers of this one."
But if the incumbent is hoping to hook up with its competitors in a collaborative FTTH rollout, it should consider what happened in the Netherlands a few years ago, says Enck. Dutch incumbent KPN Telecom NV (NYSE: KPN) tried to strike a partnership with its rival cable companies to jointly build and operate a fiber network, but "the cable companies refused flatly," says the analyst.
The result? KPN has been left out of the major plan to fiber up Amsterdam, losing out to broadband wholesale specialist bbned . (See Amsterdam Commits to FTTH, Amsterdam Fires Up Muni Broadband, and Amsterdam Gets Active With FTTH.)
France Telecom isn't the first major European incumbent to announce FTTH plans. Last year Deutsche Telekom AG (NYSE: DT) pledged to spend billions of euros on its next generation access strategy. (See DT Flings Billions at Fiber Access and DT, TI Set to Spend Big on Broadband.)
— Ray Le Maistre, International News Editor, Light Reading