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Viewing cable 07PARIS2154, France: Telecom and Information Technology Update
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Reference ID | Created | Released | Classification | Origin |
---|---|---|---|---|
07PARIS2154 | 2007-05-24 13:54 | 2011-08-24 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Paris |
VZCZCXRO5742
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHFR #2154/01 1441354
ZNR UUUUU ZZH
R 241354Z MAY 07
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC 7579
INFO RUCPDOC/USDOC WASHDC
RUEAFCC/FCC WASHDC
RUCNMEM/EU MEMBER STATES
UNCLAS SECTION 01 OF 03 PARIS 002154
SIPDIS
SENSITIVE
SIPDIS
STATE FOR EB/CIP, EUR/WE, AND EUR/ERA
DEPT PLEASE PASS TO USTR JMCHALE, KSCHAGRIN, AND CHINKLEY
FCC FOR TWEISLER
COMMERCE FOR NTIA CSPECK AND ITA JBURTON
JUSTICE FOR KWILLNER
BRUSSELS FOR USEU JUNDERWOOD
E.O. 12958: N/A
TAGS: ECPS ETRD FR
SUBJECT: France: Telecom and Information Technology Update
REF: Paris 2027
¶1. (U) This update covers recent news in the French
telecommunications and information technology sectors, including
internet and e-commerce.
Contents:
-- Telecom Policy Gets a New Home (para 2)
-- Fourth Mobile License (para 3)
-- High Speed Internet Success in France (para 4)
-- Alcatel-Lucent's Lower Profits (para 5)
-- Protests over Alcatel-Lucent job cuts (para 6)
-- Alcatel Promotes Chinese 3G standard (para 7)
-- Verizon and Alcatel-Lucent Announce Lucrative Contract (para 8)
-- Deutsche Telekom Sells French Internet Subsidiary
(para 9)
-- France Telecom Announces Revenue Increase (para 10)
-- Orange gets new Boss (para 11)
-- Orange Video-On-Demand (VOD) becomes Paramount (para 12)
-- Orange Experiences Rapid Growth in Egypt (para 13)
-- Mobile Phones As Credit Cards (para 14)
Telecom Policy and Sarkozy's Ministerial Restructuring
----------------------------------
¶2. (SBU) President Nicolas Sarkozy has split the former Ministry of
Economy, Finance and Industry into two separate ministries -- a
Ministry of Budget, Public Accounts and Civil Service, and a
Ministry of Economy, Finance and Employment. Telecommunications
policy should remain within the purview of the latter, though
whether it will remain the domain of a Directorate for Information
Technology is not yet clear. The new Minister of Economy, Finance
and Employment, Jean-Louis Borloo, previously served in the Raffarin
and Villepin governments as Minister for Employment, Labor, and
Social Cohesion during 2004-2007, and Junior Minister for Towns and
Urban Renewal from 2002-2004 (reftel). The change in government will
not affect the telecommunications regulator, Paul Champsaur, who was
appointed in 2003 and should remain in place until 2009. President
Sarkozy supports Champsaur's project to encourage investment in
fiber to French homes.
Fourth Mobile License
---------------------
¶3. (U) Telecom regulator ARCEP has invited bids for France's fourth
third generation (3G) wireless license, due on July 31. The license
will be awarded by a "beauty contest" against a set of criteria
specified on ARCEP's website (www.arcep.fr). The application
procedure is similar to that used in issuing the previous three 3G
licenses. Rumors in the market indicate that the Iliad Group, in
conjunction with a partner, and Neuf Cegetel are likely bidders.
New ARCEP Figures Attest to High Speed Internet Success in France
----------------------------------
¶4. (U) According to ARCEP's recent data, France counts 12.7 million
high-speed internet subscribers. In 2006, Internet providers
attracted 3.2 million new subscribers, a 34 percent increase over
the previous year.
Alcatel-Lucent's Lower Profits
------------------------------
¶5. (U) Alcatel-Lucent, the world's largest supplier of
telecommunications equipment, said that 2007 first-quarter adjusted
profit fell 35 percent (year-on-year), hurt by restructuring costs
and a twelve percent decline in sales. Profits fell to 199 million
euros (USD 268 million), down from 306 million euros (USD 413
million) a year earlier. To May 10 Alcatel-Lucent stock had fallen
by 11 percent. Alcatel-Lucent's wireless business is particularly
vulnerable, with wireless revenue having fallen 15 percent from a
year earlier. CEO Patricia Russo blamed the drop on deferred sales
in anticipation of Alcatel-Lucent's launch of newer product lines.
Russo has said that restructuring and integration plans are on track
and that the company should save 600 million euros (USD 810 million)
this year. Investors apparently like what they see and the stock
has enjoyed a partial rebound in the last week.
Alcatel-Lucent Labor Issues
---------------------------
¶6. (SBU) Alcatel-Lucent restructuring plans include 12,500 job cuts
over three years to help reduce costs, and the company had achieved
PARIS 00002154 002 OF 003
15 percent of its target by the end of the first quarter. In the
largest demonstration against these plans so far, an estimated 3,000
to 5,000 workers marched on the company's headquarters in Paris on
March 15 against the 1,500 planned cuts in France. "Alcatel-Lucent
is a global company with its base in Europe and this is a French and
European problem affecting the future of high-tech industries," said
Confederation Francaise Democratique du Travail (CFDT) union
Secretary General Francois Chereque. French employees took part
SIPDIS
alongside workers from Belgium, Germany, Italy, the Netherlands and
Spain. Affected regional governments are also taking action against
Alcatel-Lucent. In response to Alcatel-Lucent's plans to close a
research center and lay off 200 local employees, the Brittany
regional government blocked a 1.8 million euro (USD 2.39 million)
regional aid grant to a "competitiveness cluster" in which
Alcatel-Lucent participates.
Alcatel Promotes Chinese 3G standard
------------------------------------
¶7. (U) Alcatel-Lucent's Chinese affiliate, Alcatel Shanghai Bell,
and China's Datang Mobile will provide the Chinese TD-SCDMA third
generation (3G) mobile phone standard used in a trial by China
Mobile. China Mobile will use the 3G standard in a trial network
expansion in Shanghai and Guangzhou. The TD-SCDMA technology allows
for voice and high-speed data services, such as internet access,
video streaming, and remote access to software applications.
Chinese carriers reportedly have been reluctant to use TD-SCDMA,
preferring to use the better known cdma2000 and W-CDMA standards.
Verizon and Alcatel-Lucent Announce a USD 6 Billion Contract
----------------------------------
¶8. (U) Verizon Wireless and Alcatel-Lucent announced in late March a
three-year agreement worth an expected USD 6 billion for
Alcatel-Lucent to supply a wide variety of network equipment,
software and services supporting Verizon Wireless' ongoing network
expansion and continuous improvements. With this agreement
Alcatel-Lucent continues to be Verizon Wireless' primary network
infrastructure supplier and will continue to help grow Verizon
Wireless' multimedia and data services. Under the agreement,
Alcatel-Lucent will provide infrastructure solutions to transition
Verizon Wireless to an all-internet protocol network.
Deutsche Telekom Sells French Internet Subsidiary
----------------------------------
¶9. (U) Telecom operator Neuf Cegetel won a tender for French
Internet operator Club Internet, an ISP sold by Deutsche Telekom.
Neuf Cegetel's bid, between 430 and 460 million euros (USD 560-600
million), topped that of rival operator Free, owned by the Iliad
Group. Club Internet, which has 600,000 subscribers to its high
speed internet service, made a 2006 operating loss of about 100
million euros (on sales of more than 200 million euros) as a result
of heavy investment to encourage client growth. With this
acquisition, Neuf Cegetel has the second largest number of
subscribers to its Internet service in France, overtaking close
rival Free. France Telecom remains the market leader, with 49.2
percent of the market. Rumors are floating that Telecom Italia's
French Internet unit, Alice, may be the next company up for sale. A
recent magazine rated Alice's customer service the worst in a market
not known for its customer friendliness.
France Telecom Announces Revenue Increase on Mobile Gains
----------------------------------
¶10. (SBU) France Telecom (FT), Europe's second largest phone
company, said first-quarter sales unexpectedly rose 1.8 percent,
lifted by revenues from mobile services in emerging markets and
Internet services in France. Sales increased to 12.84 billion euros
(USD 17.52 billion) from 12.81 billion euros a year earlier. FT
executives told us that value-added Internet services would make up
for declines in traditional voice calls by the end of 2007. FT also
expected growth by expanding its wireless business in emerging
African and Central European markets, which are growing rapidly.
Analysts had expected a mild sales decline prior to the release of
first quarter results. Operating profits rose 1.5 percent to 4.66
billion euros (USD 6 billion) in contrast to the 1.5 percent decline
that analysts had predicted. FT shares rose by 3 percent to 21.59
euros (USD 28) on the news.
Orange Gets a New Boss
----------------------
PARIS 00002154 003 OF 003
¶11. (U) In the preamble to the announcement of its quarterly
earnings, France Telecom announced the departure of mobile telephony
subsidiary Orange's Director-General Sajiv Ahuja. Ahuja has led
Orange since 2003, and is leaving at a time when profits are
rebounding. Profits in the first quarter grew by 1.8 percent, with
revenues growing by 1.5 percent. Management of the business unit
will pass to Olaf Swantee, who is moving over from Hewlett Packard.
Orange Offers New Video On Demand Services
----------------------------------
¶12. (U) Orange has signed an agreement that will allow its broadband
digital TV and high-speed Internet subscribers access to new video
on demand (VOD) content from Paramount and DreamWorks Studios.
Orange's VOD package, 24/24 Video, rotates its film offer each week
from a catalogue of over 2,500 films. They include back catalogue
titles from major studios and independent French and international
productions. Rental starts at 3 euros for 24 hours and includes
unlimited viewing, pause functions and fast forward and rewind.
Films are offered in French or original language versions with
subtitles.
Orange Experiences Rapid Growth in Egypt
----------------------------------
¶13. (U) France Telecom's growth strategy in Egypt is emblematic of
growth in emerging telecom markets. FT owns 71.25 percent of
Egyptian mobile operator Mobinil, which recently reached 10 million
subscribers and has a 52 percent market share in the country. FT is
seeking to use Mobinil as a springboard for further investment in
the Africa and Middle East region. FT plans to create 400 new jobs
at France Telecom's Orange Business Services (formerly Equant)
centre in Cairo, bringing the total number of employees there to
1,500. Orange Business Services -- a global leader in communication
solutions for multinational companies worldwide -- has its largest
center in Cairo.
Mobile Phones as Credit Cards
-----------------------------
¶14. (U) French wireless telecoms groups Bouygues Telecom, Orange and
SFR agreed with French train company SNCF, Paris metro firm RATP,
and private firms Keolis, Transdev, and Veolia to allow travelers to
use cell phones as contactless credit cards. The companies set up a
working group on April 13 to implement the accord. The working
group, which is part of the Secure Electronic Transaction
"competitiveness cluster" located in Caen, Normandy, intends to
provide a common standard for "transportation cards on mobile
phones" by next fall. To pay for a ride, users will need only wave
their cell phones past readers to be installed throughout France.
This system has already been tested by Bouygues Telecom on Paris's
public transportation system RATP since March 2006. French rail
company SNCF also has a mobile phone ticketing service, under
experimentation since July 2006, and which requires an
Internet-capable phone. Users pay for the ticket over a secure
payment system and receive a multimedia message to their phone that
includes a bar code. The message serves as a ticket that can be
shown to ticket collectors on the train.
STAPLETON