France

The opening of the telecoms industry has been effective in France since January 1st, 1998. It is too early to measure the effects of competition on fixed telephony even if Cegetel had 550,000 subscribers at the end of November for "Le 7" telephone service. Cegetel is thus the only company with the capacity to rival France Télécom on the French telecommunications market. Cegetel is hoping to be able to offer in two years what it took the monopoly thirty years to build. A national network and a services package destined to please business and the general public alike, without however providing for all of the market sectors covered by France Télécom as they are not all lucrative. The objective is therefore to become leader of the fixed/mobile telephone and Internet sectors. The corporate market is clearly displayed as a major strategic axis.

However, other operators are appearing on the market and positioning themselves in different market spaces: selling bandwidth to operators (Esprit Télécom), prepaid cards (Omnicom), call re-routing and company local loops (Colt Télécom) etc. Some of these new operators depend on large partners (Belgacom, Colt Télécom, Siris and Unisource, Worldcom…). Foreign operators, who generate the largest part of their income abroad, can allow themselves to make short-term investments in the more lucrative sectors of the French market.

Thus, the French market is in major evolution: a multitude of new operators is appearing and often in an unexpected way. However, the existence of France Télécom is in no way threatened, and, even if Cegetel does not keep its position in second place on the company market, it will still remain amongst the largest. Indeed, there are still major uncertainties concerning the legislation for this new sector: the opening of the telecoms sector was translated in many legal battles: Colt Telecom against EPAD about the monopoly of FOD; AXS Telecom and Esprit Telecom against ART about previous attributions of single-digit access codes; alternative telecom operators against France Telecom about France Telecom's special rates for Internet access of schools. In case of anti-competitive behaviour several courts are able to receive the operators' appeals and complaints. There are several types of appeals in France which can contradict each other and delay decisions. As a contrast to the situation in the United Kingdom, France lacks a simple and efficient appeal system. As the competition grows, France is doing its training with the new regulatory framework: the telecom industry is building its own jurisprudence.

1. The French competition in telecoms and Internet

A survey carried out at the end of 1997 by CSA-La Tribune-Mercer Management tracked the opinion of French people concerning the historical operator and the potential effects of competition. The outputs showed that French people are in general interested by the opportunities of competition in telecom; i.e. reduction of prices and increase of services offered.

The first question addressed the level of satisfaction of France Telecom's services. 90% of French people are satisfied by France Telecom's services. The level is very high.

The second question concerned the intention of French people in regard to the new French telecom environment. 69% of French people intend to compare the prices of the different operators; 66% to contract with a next operator in case of a more attractive offer; 63% analyse the market and the operators' offers to identify the best one; 52% to select different operator for different kind of services. This last opinion is a little bit contradictory with an other question of the survey concluding that for 60% of French people it is better to have a single operator for all the communications and services even if prices are higher than different operators for different services.

A last output indicated that the top-five important selection criteria for French people are: price; clear and detailed billing; quality of commercial relationships; the simplicity of contracting; the number and the quality of services offered.

2. Who are the new entrants

Different categories of new entrants can be identified in France:

• Utility companies (cable networks, radiocommunication, water supply, electricity supply, canals, railways and subways, highways). They usually have capacities to install telecoms networks and are used to manage billing issues. They sometimes need to find an agreement to improve their existing infrastructures (like SNCF) or to find financial partners to set up a telecom offer (water supply company or EDF);
• Large industrial groups looking for diversification (Bouygues);
• Historical operators from foreign countries that look for entering into new markets. They have cash, know-how and traffic capacities at an international level (BT and Cegetel, Telecom Italia and 9 Telecom SA) ;
• Other operators from foreign countries (Tele2 France, subsidiary of Telia)
• Reseller operators (Omnicom…)
• Banks or pension funds that have a first experience in telecoms and look for new opportunities.

The following table gives an overview of the operators that bid for and/or awarded a licence.

Source : ART, Liste des licences attribuées

The following table describes the services offfered to companies by new entrants which already have a prefix:

3. Two global competitors

3.1 Cegetel

Apart from France Telecom, the first investor in the French telecom industry is "Compagnie Générale des Eaux" (CGE). Operating for the last 8 years in mobile telephony, it announced at the end of 1996 the creation of Cegetel, a subsidiary devoted to telecommunications, with 3 partners: BT, Mannesmann and SBC. CGE has been renamed Vivendi after the purchase of the communication Group Havas on March 9, 1998.

Early 1997, Cegetel was being selected to become the strategic partner of SNCF in the telecom sector. Telecom Développement is the joint venture associating SNCF and Cegetel and the SNCF's fiber optic infrastructure (10,000 km) became the network basis of the new company. Cegetel recently agreed to share its Internet services in a joint venture with Canal+, AOL and Bertelsmann, becoming one of the first Internet Providers in France (with more than 230,000 subscribers). A number which has grown with the integration of Havas On Line Internet activities after the purchase of Havas by CGE. France Telecom took control of 67% of the capital of Oleane on March 17th, 1998 and announced between 350,000 and 400,000 Internet customers.

Cegetel has opened its fixed telephony offers i.e. "Le 7 Grand Public" for general public and "Le 7 Pro" for businesses. Since May 1998, the service is available throughout the whole country.

Cegetel intends to become the main competitor of France Telecom. It has already attracted 550,000 subscribers to "Le 7". Its objective is to reach 20% of the long distance market in 2003 and to contract with more than 600,000 customers at the end of 1998 and with 2 million in 2000.

Competition is based on attractive prices below than France Telecom ones (for general public 10- 57% for national calls, 10-39% for international calls and about 20% for businesses). The subscription fee for the general public is FF10 a month. Pleiade is an "a la carte" service without connection or subscription fees.

Cegetel has been selected by the government to set up the "Réseau Santé-Social - RSS", a national Intranet for Health which will interconnect every doctor, chemist, hospitals, and social security organisations. With around 400,000 PCs, it will be the most important Intranet in France and will entail FF100 million of investment.

3.2 Bouygues

Bouygues granted a mobile telephony licence (DCS-1800) in 1995. Negotiations with Stet International (Telecom Italia) led to the creation of "9 Telecom SA" in December 1997 that focus on the global telecom market via three subsidiaries: "9 Telecom Réseau" for infrastructures and network management; "9 Telecom Entreprises" for businesses (large companies and SMEs) ; 9 Telecom for general public and small businesses. An alliance was signed with VEBA Telecom for 9 Telecom. Bouygues has no infrastructures by its own. It needs to contract with alternative players like utility companies to build up its own network. Agreements were signed with Telcite, RATP's subsidiary, and highways companies. In november 1998, the Bouygues group shed its activities in the fixed telephony to let Telecom Italia take the lead of 9 Telecom SA. Bouygues SA keeps only 19.7% of 9 Telecom, Telecom Italia is now the main shareholder with 80.3%. The "9 Telecom SA" services (for general public and small businesses via 9 Telecom) is available since December 1998 (long distance and international calls). But "9 Telecom Entreprises" (for businesses) services is not yet defined.

Cable & Wireless is close to selling its 20 per cent stake in Bouygues Telecom. Telecom Italia was first understood to be vying for this stake. But Bouygues has recently precised that the sell will not occure in 1998.

After a long period of opinion conflict about the group' strategy in telecom field, Vincent Bolloré - a french investor who had taken a 12.6% interest in the group last year - finally sold his share in December to Artemis, a François Pinault 's holding company which already hold a 4% interest in the Bouygues Group. The Pinault - Printemps - Redoute (PPR) group has got, via its subsidiary Kertel, a 4 numbers prefix in wired telephony and commercialises pre and postpay cards.

4. Specialised operators

In addition to the list of new entrants indicated in the table in section 2, specialised operators are providing telecoms services and access to telecoms capacities. Some of the more significant are for instance:

• Air France, data transmission services for SMEs. An agreement with SITA has been set up to extend the provision of services.
• AT&T
• BT
• Cable & Wireless that provides international services
• Canal+, Internet access via satellite
• Equant, subsidiary of SITA provides international services
• Global Access that provides international telephony and virtual private networks services
• Global One, via France Telecom
• IBM Global Network provides different added value services for data transmission
• Infonet provides LAN interconnection services
• KDD provides international capacities
• NTT provides mainly access to the Internet
• Telegroup/Global Access provides virtual private networks services