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Fixed-Mobile Convergence to Become Key Competitive Focus in France

French telecommunications operator SFR said it will include unlimited calls from fixed lines to French mobile phones in its new service package from Jan. 18, in another sign that competition is heating up in the French telecoms market.

The decision to include fixed-to-mobile calls in its new package combining fixed telephony, TV and internet services comes after smaller rival Iliad SA last month said it will offer such calls for free with its new triple-play box.

French telecom operators are trying to make their offers more attractive to lure in new clients, while prices for their offers will rise from Feb.1 following a hike in value added tax in the country.

France Telecom SA currently offers its triple play clients one hour of free calls from fixed to mobile phones and subscribers of its quadruple-play offers, which includes mobile services, also enjoy unlimited calls to four pre-selected mobile numbers, a spokesman for France Telecom said.

"We haven't registered a demand from clients for unlimited calls to mobile phones...but we are monitoring very closely what is happening on the market," the spokesman said, noting that, on average, a client only uses between 25 and 30 minutes of the free hour of fixed-to-mobile calls.

The regulatory environment encourages competition, but a saturated market makes it a tough operating environment. "Convergence is the key competitive factor in France, and it is one of the most advanced convergence markets in the world," says Sylwia Boguszewska, Analyst at Pyramid Research. "The bulk of convergence will continue to be in triple-play services, mostly bundles of voice, TV, and broadband," she adds.

France leads the European telecom market in terms of the cheapest and most innovative triple-play bundles. "This is driven by intense competition, but also in part by a tax break (while broadband and phone services are charged at a 19.6 percent rate, the other 50 percent of the bundle is categorized by most telcos as TV services, and is thus charged at a lower 5.5 percent rate)," states Boguszewska. "For instance, the recent Orange quad-play promotion includes: Internet (up to 20 Mbps), TV (up to 120 channels), voice (unlimited land line calls in France, one hour to mobile) and 3G+ mobile broadband for euro 34.99 ($44.03)," she indicates.

"Operators are also moving to quad-play services by adding mobile broadband or voice to their portfolios," says Boguszewska. Pyramid expects quad-play adoption to be in 4.5 percent of all households by 2015. "Fixed-mobile convergence will become an increasingly important competitive focus over the next couple of years as femtocell technology matures and become more affordable," she says.

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