Neuf: Time Is Right for IPTV
France is Europe's most advanced IPTV market, with three service providers -- Neuf, France Telecom SA (NYSE: FTE), and triple-play firebrand Iliad (Euronext: ILD), with its Free business -- competing for customers (see Competition Trumps Demand in Euro IPTV, French Say Oui to DSL TV, and Iliad Ramps Up Broadband to the Homer).
Now Neuf is stepping things up a gear, following a frantic year of access network expansion. The operator, formerly known as LDCom, operates a nearly national fiber network and offers wholesale and retail services in France. It has been the most aggressive unbundler of the French local loop, having installed its own access equipment in more than 700 local exchanges, covering the majority of the French population.
Talking to Light Reading at last week's TVoverDSL 2005 event in Paris, François Paulus, director of the operator's networks division, says Neuf trialed TV-over-DSL in September 2002, but "we wanted to own the customer, so we waited for unbundling," which took off in France in 2004.
In just one year Neuf has unbundled 700,000 lines for its own retail business and for its wholesale ADSL customers such as Tele2 AB (Nasdaq: TLTO), Tiscali, and T-Online International AG under T-Online's brand, Club Internet.
It began its TV service last year by reselling Canal Plus's satellite service of about 80 channels, but the broadcaster owned the set-top box and billed the customers.
Neuf recently launched its own 70-channel TV service, Neuf Telecom, which it is now marketing to its 400,000 DSL subscribers. "We've been negotiating content rights with the owners ourselves," says Paulus. It's important to have something original to offer the subscribers, he notes. "Competition is so intense in the Internet access market, and you would need millions of customers to make money from high-speed access services alone, because it's already so cheap."
So now Neuf has its own triple-play bundle: 8-Mbit/s Internet access for €15 (US$19.55) per month; flat-rate national VOIP, using softswitch technology from Nortel Networks Ltd. (NYSE/Toronto: NT), for €9 ($11.73) per month; and the Neuf TV service for €6 ($7.82) each month.
Paulus says Neuf decided some time back to go all IP, but is having to rely on some legacy technology in the short term. "We have based our approach on IP DSLAMs from Huawei, but it's good to have more than one supplier, so we also have Alcatel ATM DSLAMs and have got them to add Gigabit Ethernet interfaces to their equipment while we test their IP DSLAMs."
The operator's other main technology partner is Cisco Systems Inc. (Nasdaq: CSCO), which has supplied a range of IP switches as the operator has beefed up its network.
"We were already using Gigabit Ethernet Cisco equipment for our corporate services, and put out a tender when we expanded the network. It was a close thing between Cisco and Foundry." Now Neuf has upgraded its long-distance network to 10 Gbit/s to cope with the demands of transporting video traffic.
Its next move, in the fiercely contested Paris market, is to supply its customers with new set-top boxes from Netgem that not only deliver the TV-over-DSL channels, but also accept over-the-air terrestrial channels. This is a smart move, as some of France's most popular channels, such as TF1, have so far refused to provide their content to the IPTV brigade.
But Paulus says there are no definite plans to move into video on demand (VOD). "That's a tough market. We're looking at how others, such as FastWeb [in Italy] are doing it," but it involves a lot of upfront cost, he says.
"We're not a conservative company, but we're not going to throw our money out of the window."
— Ray Le Maistre, International News Editor, Light Reading