In recent years, France Telecom has been working overtime to prove that a lumbering incumbent telco can become a nimble global provider of quad play services by dramatically expanding its offerings for IPTV, mobile television, broadband Internet connections and other services. In the last 12 months alone, the subscriber count for its Orange IPTV offering jumped 72% to over 1.7 million subscribers, making the telco the world’s second-largest provider of IPTV services after Spain’s Telefónica.
Europe’s multichannel landscape differs markedly from the U.S. Cable is not the dominant provider of pay TV service in a number of key territories and a very different regulatory structure has produced a highly competitive telecommunications market where triple-play bundles of video, high speed Internet and phone sell for about $39 or less in some territories.
Even so, France Telecom provides a compelling case study of kind of competition cable and satellite operators may face as large telcos begin to move aggressively into the television business with IPTV, mobile TV and other services.
Jean-Marc Harion, vice president of business development for France Telecom North America, outlines about the telco’s strategies, describes some of its converged services and explains that American cable operators might learn from France Telecom’s operations. An edited transcript follows:
MCN: Tell some of our readers who might not be as familiar with France Telecom as they should be, a little bit about your businesses and your bundled offerings?
Jean-Marc Harion: Orange is the second mobile operator in Europe and the largest broadband operator. Worldwide, we are the second-largest broadband operator and the second IPTV operator.
The core of our strategy is the convergence of the different networks and services — mobile, [phone], Internet and TV — and we’ve tried to be a pioneer in providing those services.
For example, we were the first operator to launch video on demand for the PC [via] DSL. In 2004, we were the first to launch mobile TV in Europe in 2004. We were the first to have high definition video on DSL. Earlier this year we also launched a hybrid [video delivery platform] using DSL and satellite. We try to deliver lines of services among all the devices — TV, the PC, mobile — as part of our content everywhere strategy.
We are also working to leverage the development of IPTV and mobile TV. We are still the most aggressive mobile carrier in Europe for 3G. We have over 13 million mobile TV users all over Europe and we believe there is a clear relationship between the growth of IPTV and the growth of mobile TV.
MCN: How does content fit into your triple play and quad play strategy?
JMH: We have a very aggressive content acquisition and aggregation strategy. To enrich our IPTV offer, we distribute our own thematic bouquets of channels and we distribute bouquets from our partners.
We have services like video on demand and as part of that we have negotiated a large number of titles from the majors. We have high-definition [video] and of course we acquire exclusive rights in some countries for such sports as soccer. To leverage those rights, we have created our own thematic channels for sports and we do that as well for movies and series. We’ve even created our own production company for movies so we are able to get first broadcast rights.
We also have over [7 million] Liveboxes in Europe. [Livebox is a home gateway system] that has allowed us to build a kind of home ecosystem for digital home services which include TV, voice over IP, Wi-Fi and other services.
MCN: You mentioned earlier that the centerpiece of your strategy is the convergence of services. How do you see that convergence affecting the future of your bundles and the nature of the services that consumers might see in those bundles?
JMH: Convergence is a word that that can have a very broad meaning. For us, it is about the experience a person will have on all the devices that he uses during the day. An excellent example of our vision is being able to deliver content to the customer [on various devices.] If he watching a football game at home and then if needs to go to work, he will keep watching the same game on his mobile and when he gets to work, he can access a computer to finish watching.
That is a clear example of our vision and something we are already delivering in Europe.
Another example is one of our most successful products, Business Everywhere. For the mobile employee, it offers a connection kit that is totally network agnostic. It allows you to connect your laptop to whatever network — 3G, Wi-Fi, Wi-Max, etc. — is available.
As part of that vision, we [began focusing] on our bundles very early on. In Europe, of course, bundles are much cheaper than in North America. The average price of a bundle with broadband internet, with speeds of 8 Megabits or more, a basic TV bouquet and voice over IP with unlimited calling is about [$38.64].
By providing a bundle like that, we believe we can increase the levels of satisfaction of our customers. It is the natural evolution of our business.
When we speak about the bundle it is also interesting that we have found that TV is the most appealing part of the bundle for consumers. It has become one of the major criteria for customers to choose our offers.
MCN: With all the competition, how do you avoid competing purely on the basis of price for your bundles? What kind of high margin services do you think will be particularly appealing?
JMH: I would have to say that price sensitivity is not the first criteria for consumer choices. Most of the time we are not the cheapest in the market, but we do provide a very good customer service. We leave our competitors to try to struggle and compete on the price.
But to come back to your point, there are still a lot of services that can be invented and reinvented on the DSL network. There are number of services related to home security, home networks with the Livebox, interactive TV, and [further down the road] 3D TV, [where we are doing some trials.] Content we think is key.
I already mentioned our channels and our TV production, but we are very active creating content for the Web. We operate a number of portals for information and services. The Orange sites have 60 million to 70 million unique visitors and our total network reaches 130 million unique visitors. Because we are developing and distributing our content on all the screens, mobile, PC and TV, we are able to sell advertising on all three screens. That is part of our content strategy because the monetization of content is critical.
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