France Telecom to step up spending on fiber networks

Reuters

France Telecom will double its investment in fiber networks in 2012 to $395-$460 million and won't scale back its broadband ambitions because of intensifying competition in its home market, its chief executive said on Wednesday.

In testimony before the French National Assembly, Stephane Richard said fiber investments were key for the former state-owned monopoly to modernize its broadband network and offer high-speed Internet to customers.

France's telecoms (Paris) market has been in turmoil in recent weeks since Iliad (Paris) launched an aggressive low-cost mobile service, touching off a price war. Analysts expect the new market conditions to erode profits at other mobile operators, France Telecom, Vivendi (Paris), and Bouygues Telecom (Paris), and could lead some to trim network investments.

"The arrival of a new competitor in the mobile market a few weeks ago will not call into question our dedication to invest in fiber," said Richard. "I will protect fiber in our budget because it's crucial to our future competitiveness."

France Telecom has pledged to spend $2.6 billion by 2015 on rolling out a national fiber network. It has also signed accords with its three competitors to collaborate on fiber projects in rural areas and some mid-sized cities so as to speed up deployment and share the cost.

Nevertheless, France Telecom and its rivals have been slow to get fiber investments off the ground because of their high costs and long payback times of 30-40 years.

For example, Richard said France Telecom spent $198 million on fiber last year, while Iliad has said it spent $280 million in 2010. These levels are far short of the roughly $33 billion that France's telecoms regulator has estimated it will take to cover the country with fiber broadband.

The French government has been trying to spur its four telecoms operators to build national high speed fiber broadband networks, and in 2010 pledged several billion euros to that end.

The issue of Europe's slow pace of fiber broadband buildouts is also on the radar of policymakers elsewhere. In October, the European Union floated the idea of cutting the rates that large telecoms operators charge smaller players to rent copper-based networks as a way to spur them to invest in faster fiber optics networks.

The proposal by Digital Agenda Commissioner Neelie Kroes was immediately slammed by Telefonica and Telecom Italia, among others, who argued such a move would actually weaken companies ability to invest in fiber.

Richard echoed that stance and urged French lawmakers not to keep changing the rules on telecoms operators. "It's not by cutting off the lifeblood of operators that you will encourage them to invest," he said.

Kroes' proposal on fiber "is counterproductive to say the least," he added.

 (Reporting by Leila Abboud, Gwenaelle Barzic; Editing by Elena Berton and Mark Potter)

ArticleTools

Featured Reports

Geo IoT Outlook: Technologies, Services, Applications

Geo IoT is anticipated to move well beyond simply the ability to determine proximity for commerce and various retail applications. Longer term, presence detection and location determination will be a critical aspect of IoT privacy, security, and preference management for both consumer and industrial applications. 
Buy now

 

DAS Market Analysis and Forecasts 2016 - 2021

Analysis of the DAS market, including carrier WiFi, small cells, and SON, and the leading companies in the DAS ecosystem and their solutions.  The report also includes evaluation of market drivers, challenges, and provides forecasts for 2016 to 2021.
Buy now

 

NextGen Network OSS/BSS Forecast 2016 - 2021

Comprehensive coverage of NGN OSS/BSS including opportunities within Big Data and IoT, analysis of the drivers and issues related to the technical and business aspects of OSS/BSS, deployments and operations issues, and quantitative analysis with forecasts for anticipated growth through 2021.
Buy now