| Will France Telecom Let Wireline Die? |
| Written by Dave Burstein |
| Wednesday, 01 July 2009 00:46 |
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Didier Lombard of France Telecom leaked to the press that he is considering slowly abandoning the French landline network. He doesn't like ARCEP's protection of competition in fibre and is threatening to stop investing. FT probably is just trying to intimidate the regulator, but AT&T is doing just that. AT&T could have built something like FiOS, but Randall's ego doesn't need a wireline network. He rather have the $15-25B cashflow.
FT claimed running the spare fibre inside connected buildings would raise costs 40%. Jean-Ludovic Silicani of ARCEP knows it's closer to 5%. “Installing multiple fibers adds about 5%, which the competitor pays. These are facilities that will serve for the next fifty years. It would be totally unreasonable to eliminate freedom of choice for such a low cost difference. ARCEP supports the public interest, not the interests of a single operator.” (Edited Google translation from Les Echoes in French http://bit.ly/p8lb9 in google translation http://bit.ly/F4pFb ) Benoit Felen of Yankee Group is also skeptical, pointing FT's cost of fiber in the building will be substantially less with the sharing because the other company (Free.fr, SFR/Cegetal) than has to pay half the cost. He raises the possibility “that FT might have decided that they would pull out of the wired infrastructure business altogether,” which he dismisses. The well-informed Felton - and presumably Lombard - realize folding back on fiber in the competitive French market will accelerate line loss. I believe Lombard could be completely serious, just as Randall Stephenson has decided to let AT&T's landline business slowly die rather than continue investing at a normal pace. “We are a wireless company” was Randall's first major public statement, and he cut the U-Verse DSL upgrades by a third this year. It would have cost AT&T $25B to build something like FiOS, and he decided against the investment five years ago. Without fiber home, AT&T will have lost 45-70% of landline customers by 2016. The copper's highest value will be for femtocells, effectively doubling his wireless bandwidth, a deployment exciting the DSL industry. It's cold-blooded to let the old telco business go (and 50,000 jobs) but that's how Randall sees the numbers. Most of us think he's making a mistake, but the result is uncertain. Lombard just won a license in Tunisia, and has investments in Egypt, Botswana, Cameroon, Ivory Coast, Equatorial Guinea, Madagascar, Mali, and Senegal. They are considering Vietnam and perhaps India. In France and Britain, their profit comes from wireless, not landlines. With the fourth mobile license soon coming in France, their margins will go down and investment probably up. Except for Saul Hansell and some on Wall Street, few people realize that big wireless companies like AT&T and possibly FT are putting copper into “harvest mode.” The companies never speak of it directly, but it can be inferred from their investment choices. Silicani and Felton are probably right that FT has no such intention, but ARCEP will have to watch carefully to make sure FT doesn't let network quality drop. http://bit.ly/mmMMT |