Press conference. ARCEP 11 th January 2012

Transcription

1 Press conference ARCEP 11 th January

2 Contents 1. Market status Traffic up, revenue and prices down The development of unlimited offers driving traffic up The switch to broadband driving growth 2. Mobile price index ( ) Methodology Accelerated drop in the price index in 2010 Increase in minimum spending and consumption levels 3. Ultra high-speed mobile (4G) Results of the spectrum licence awards in the 800 MHz and 2.6GHz frequency bands Objectives set for 4G licence awards achieved 4. Fixed broadband and ultra-fast broadband A dynamic broadband and ultra-fast broadband market Unbundling expanded Roadmap to superfast services Progress made by fixed ultra-fast broadband 5. Internet and network neutrality: implementing the proposals Implementing the proposals Consultation on the quality of internet access services Gathering information on interconnection 2

3 1. Market status Traffic up, revenue and prices down The development of unlimited offers driving traffic up The switch to broadband driving growth 3

4 Traffic up, revenue and prices down Sharp increase in consumption levels during the year: +2.8% for fixed and mobile calls; +42% for SMS; +92.6% for data (cf. slides 5 and 6) Prices continue to drop (cf. price index) Electronic communications market revenue totalled 10.2 billion in Q3 2011, or 2.7% less than the year before Fixed services revenue ( 4 billion) was down by 2.1% on the year (following decreases of -4.4% and -4.1% in Q1 and Q2) thanks to a higher rate of increase for broadband revenue than in the previous two quarters Mobile services revenue ( 4.8 billion) decreased for the second quarter in a row (-3.4% after a 1.9% drop in Q2) in part due to the rise in the reduced VAT rate applied to audiovisual services, which mobile operators did not carry over to retail prices. But revenue generated by internet access and broadband is up: +7.3% increase in broadband revenue +17.4% in SMS and mobile data revenue Reasons for decreased growth: In large part due to a change in VAT rates Decreases in mobile call termination charges affect retail market revenue in a way that benefits consumers The introduction several months back of handset-free mobile flat rates, in accordance with ARCEP recommendations in support of consumers, had a direct influence on customer s invoices and so on operators income 4

5 The development of unlimited offers driving traffic up ARCEP s efforts to decrease call and SMS termination rates enabled the development of offers that included unmetered calling, on both fixed and mobile networks: Calling traffic is increasing on both fixed and mobile networks (+3% compared to last year on wireline networks and +2.7% on mobile networks) Mobile customers consumption is rising steadily, thanks to the increased number of offers that include an unlimited component for calls, aimed at heavy users, or text messages (+42%) As VoIP services expanded to include unlimited calls to mobile lines in early 2011, the volume of this type of call practically quadrupled in the span of a year millions de minutes Fixed to mobile calling minutes Volume de communications (Million fixes minutes) vers les mobiles Calls to mobiles T T T T T T T T T T T Of which VoIP calls Communications vers les mobiles dont communications en VLB 5

6 The switch to broadband driving growth POTS calling being pushed out by voice over broadband Voice over broadband subscriptions (20.1 million) now outnumber PSTN ones (19.7 million) Two thirds of outbound calling traffic on fixed networks are VoBB calls Broadband revenue ( 2.5 billion) accounts for two-thirds of fixed services revenue Data traffic generated by mobile internet access doubled from the year before. ARCEP is publishing a graph on this traffic for the first time. Fixed and mobile ultra-fast broadband is a source of future growth Customers data traffic (in Tb) x2 in a year T=Q Volume de données consommées par les clients en tera octets X 2 en un an T T T T T T T T

7 2. Mobile price index ( ) Methodology Accelerated drop in the price index in 2010 Increase in minimum spending and consumption levels 7

8 Mobile price index: methodology ARCEP publishes its second mobile services price index The methodology is inspired by work performed with the INSEE (National Institute for Statistics and Economic Studies) for calculating consumer prices indexes. The INSEE and ARCEP signed an information exchange agreement and are working together on developing these indicators. The methodology employed makes it possible to calculate price changes based on representative customer profiles based on four criteria: the carrier providing the service the type of offer (flat rate or pay-as-you-go) consumption level for calls (heavy/medium/light tiers) time/distribution of calls ( daytime if 60% of calls are made during the day; Evening and weekend if 60% of calls are made in the evening or at weekends ; otherwise Mixed ) Profiles updated annually and calculated for the first half of each year Consumers represented by profiles are considered to be: Informed: they have a perfect knowledge of the offers available in the marketplace at any given time Free: they are able to switch services with their operator every month, regardless of the offer employed the previous month Rational: they have no trouble identifying the solution best suited to their needs/consumption profile The methodology is based on the concept of minimum expenditure The minimum expenditure is the minimum amount in current euros (incl. VAT) that corresponds to one of the offers available in the marketplace which is capable of satisfying the needs of a given consumer profile Changes in the scope of study The scope of study is mobile operators residential clientele in Metropolitan France As announced during the previous edition, this year s index includes mobile internet usage as well The two main MVNOs (Virgin and NRJ mobile) have also been added New offers that do not include a handset (rare in 2010) will be included in the next edition (concerning 2011) which will be published in the first half of

9 Accelerated price decrease in 2010 Decrease in the price of mobile services intensified in 2010: to -3.4% on the year Average annual decrease of 2.9% between 2006 and 2010 Flat rate prices decreasing the most: -5.3% a year on average and -4.4% in 2010 Price decreases can be attributed to the ubiquity of high-volume/unlimited offers (calls, SMS or internet access) in all flat rate plans, including those aimed at the lightest users Price of PAYG cards relatively unchanged year to year (+0.1%) but dropped by 1.9% in 2010 After a sizeable increase in 2006 (+4.4%), prices have been dropping since 2007 by an average 1.3% a year Change in price index, according to contract Base 100 in Jan All contracts All flat rate plans All cards Jan. July 9

10 Increase in minimum spending and consumption levels Minimum expenditure (invoice of a rational, informed and free consumer) increased by 7.6% in 2010 Taking new types of consumption (SMS and internet) into account results in increased spending, despite a drop in prices Highest increase in spending among small and mid-level consumers with flat rate plans, especially in 2009 and 2010, due to mobile internet use Gap between theoretical minimum expenditure and users actual monthly invoice is shrinking This convergence would appear to prove that consumers are choosing services that are more in line with (, their incl. VAT) actual needs The increase in minimum spending can be seen as a reflection of operators ability to tailor their offers to users consumption habits, offering unlimetered usage, and of the market s growth potential 12.9% increase in consumption in 2010 and an average annual increase of 8.4% since 2006 Increased consumption confined largely to post-paid contracts since Increase between 2008 and 2009 due to the rise in text messaging Development of the mobile internet one of the major reasons for the increase in 2010 Consumption levels for pay-as-you-go cards stable since 2008 after increasing for two years in row Change in minimum expenditure and monthly flat rate invoice -Theoretical minimum expenditure *Estimated average monthly invoice (incl. VAT) for residential flat rate plans in mainland France. The reduced VAT rate is applied to data revenue. Customers who use cards are smaller consumers of mobile data services (SMS and internet) - Actual average monthly invoice 10

11 3. Ultra high-speed mobile (4G) Results of the spectrum licence awards in the 800 MHz and 2.6GHz frequency bands Objectives set for 4G licence awards achieved 11

12 Results of the spectrum licence awards in the 800 MHz and 2.6GHz frequency bands In 2011 ARCEP carried out 4G spectrum allocation procedures in the 800 MHz and 2.6 GHz bands Thanks to these frequencies, operators will be able to begin deploying their ultra high-speed mobile networks (4G), which allow them to provide users with significantly faster connection speeds than those currently available on 3G networks The selection procedures, which began in June 2011, were carried out in two stages: first the procedure for the 2.6 GHz band whose results were announced in September then the procedure for the 800 MHz band whose results were announced in December ARCEP selected the winning candidates based on criteria listed in the call for applications: Results The amount bid to obtain the frequencies, along with commitments (or not) to host MVNOs and, for the 800 MHz band, regional development commitments 800 MHz band: frequency layout at the outcome of the procedure 791 MHz 832 MHz Bouygues Telecom (10 MHz duplex) SFR (10 MHz duplex) 821 MHz 862 MHz Orange France (10 MHz duplex) Free Mobile: roaming rights on the SFR network within a priority rollout area (cf. next slides) 2.6 GHz band: frequency layout at the outcome of the procedure 2500 MHz 2620 MHz 2570 MHz 2690 MHz SFR (15 MHz duplex) Orange France (20 MHz duplex) Bouygues Telecom (15 MHz duplex) Free Mobile (20 MHz duplex) 12

13 Objectives set for 4G licence awards achieved (1/2) Digital regional development was the main objective in the allocation of the 800 MHz band, derived from the digital dividend This imperative is contained in the Law of 17 December 2009, known as the Pintat Act, on eliminating the digital divide ARCEP responded to this objective by designing a comprehensive and ambitious scheme for ultra highspeed mobile network rollouts which operators who are allocated 800 MHz spectrum will be required to achieve: The most ambitious obligations of any country that has issued 4G licences At the national level where operators will be obligated to eventually provide coverage to 99.6% of the population of mainland France At the departmental level where they will be obligated to eventually cover at least 95% of the population of each department (as they committed to do during the procedure) Priority rollout area Representing the most sparsely populated parts of France (18% of the population and 63% of the land mass), within a short timeframe A scheme that encourages network sharing To facilitate coverage of the lower density areas by having operators share their rollout costs The areas in dark grey represent priority rollout locations 13

14 Objectives set for 4G licence awards achieved (2/2) Mobile market competition also consolidated at the outcome of these two 4G licence award procedures, which will beneficial to consumers Each of the four mobile network operators was able to acquire a quantity of spectrum (duplex frequency block of 20, 25 or 30 MHz) thanks to which it will be able to provide its customers with 4G services The golden frequencies in the 800 MHz band have been distributed fairly between three operators, as is the case in the other European countries which have allocated these frequencies Even though it was not awarded 800 MHz-band spectrum, under the terms of the procedure Free Mobile does obtain roaming rights in the 800 MHz band on SFR s 4G network within the priority rollout areas All of the selected candidates also made substantial commitments for hosting mobile virtual network operators under a full MVNO model. Monetising publicly-owned radio assets was the third objective of the frequency allocations The procedures resulted in a total valuation of the frequencies of close to 3.6 billion (compared to the reserve price of 2.5 billion), broken down as follows: 2,639 million for the 800 MHz band (vs. the reserve price of 1.8 billion) 936 million for the 2.6 GHz band (vs. the reserve price of 700 million) These amounts are in the upper range of the valuations achieved in European countries that have allocated these same frequency bands, and this despite extremely heavy coverage obligations. 14

15 4. Fixed broadband and ultra-fast broadband A dynamic broadband and ultra-fast broadband market Unbundling expanded Roadmap to superfast services Progress made by fixed ultra-fast broadband 15

16 A dynamic broadband and ultra-fast broadband market Number of broadband/ultra-fast broadband subscriptions: 22.4 million + 340,000 in Q million on the year Number of BB subscriptions: 21.8 million + 300,000 in Q million ADSL (+ 260,000 in Q3). 1.1 million using other technologies: cable, WLL, satellite (+ 40,000 in Q3). Number of broadband and ultra-fast broadband subscriptions Million - Broadband subscription - Ultra-fast broadband subscription France is one of eight European countries where more than 50% of internet connections supply speeds of more than 10 Mbps, and the only one of the five biggest European markets (source: European Commission) There are around 27 million households in France 16

17 Unbundling expanded Development of unbundling Population covered No. of unbundled exchanges - Unbundled exchanges - Population covered Unbundling continues to expand its reach, thanks to public-initiative networks and the LFO (fibre) offer exchanges unbundled in Q exchanges unbundled in one year More than 5,900 exchanges have been unbundled to date, covering close to 85% of the population Commercial success of unbundling well proven + 214,000 connections during the quarter million connections on the year ARCEP continues to work on expanding unbundling to small subscriber connection points in rural areas Work on prices, collection 17

18 Roadmap to superfast services FTTH regulatory framework is set Decisions and Recommendation on buildings in very high-density areas with fewer than 12 units Completion of the work Very high-density of the technical municipalities advisory committee on low density pockets in very high-density areas Deployment of horizontal optical fibre networks progressing 5,240 km of France Telecom civil engineering leased to alternative operators (+ 160% on the year) Operators have scheduled large-scale rollouts France Telecom and SFR have published their cofinancing offers Free and France Telecom have signed a co-financing agreement for 1,300 municipalities and 5 million homes France Telecom and SFR have signed a co-financing agreement that will make it possible to cover 60% of households by 2020 Local authorities (in Auvergne, Brittany, Manche ) have begun public initiative FTTH rollouts Roadmap to ultra-fast broadband in France up to 2020 Status of rollouts as of 1 December 2011 Legend Municipalities slated for superfast coverage Areas covered by PIN that are underway Municipalities covered by the SFR/Orange agreement (SFR) Municipalities covered by the SFR/Orange agreement (Orange) Orange municipalities not covered by the agreement Municipalities in the 4G priority rollout area 18

19 Progress made by fixed ultra-fast broadband More than 5 million homes passed for ultra-fast broadband: 1,350,000 homes passed for FTTH (+ 40% on the year), of which close to 150,000 thanks to public-initiative networks 4,270,000 homes passed for ultra-fast broadband via cable 600,000 ultra-fast broadband subscriptions (+ 45,000 on the quarter): 425,000 with coaxial cable in the last metres (+ 25,000 in Q3). 175,000 FTTH (+ 20,000 in Q3). 405,000 households or 30% of homes passed for FTTH served by at least two providers (via passive access at the concentration point) Homes passed for FTTH Homes with access to a single operator s FTTH services Homes with access to several operators FTTH services 19

20 5. Internet and network neutrality: implementing the proposals Implementing the proposals Consultation on the quality of internet access services Gathering information on interconnection 20

21 Implementing the proposals ARCEP s 10 proposals on neutrality, published in September 2010 Excerpt of ARCEP s 10 proposals and recommendations of September 2010 Recommended characteristics of ISPs internet access offers: 1. Freedom of use and quality of internet access; 2. Non-discrimination between internet traffic streams; 3. Limited exceptions to these two principles Five criteria for allowable traffic management; 4. No restriction on managed services provided the quality of internet access is kept at an acceptable level Transparency and monitoring: 5. Increased transparency with regard to end users (increased ability to compare and choose); 6. Monitoring of traffic management practices; 7. Monitoring of the quality of internet access services; 8. Monitoring of the interconnection market and importance of non discrimination (internet) ARCEP s competencies and objectives following transposition of the European framework of 2009: a new goal for the Authority which must enable end users ability to access information and disseminate it, and to have access to the applications and services of their choice ; Increased powers to settle disputes which may now involve an ISP and an undertaking providing online communication services to the public (e.g. a provider of content, applications or services); Increased transparency of ISPs on their traffic management and the limits of their services; A minimum quality of service that ARCEP may set for internet access In accordance with the Law of March 2011 (empowerment), ARCEP will deliver a report to Parliament in the first half of 2012 on the status of its work on Net neutrality Following the 10 proposals of September 2010 and the work performed in 2011, ARCEP launched two public consultations on 23 December of last year whose aim is to improve the information available to consumers and to the regulator Monitoring the quality of internet access services Regular gathering of information on the technical and pricing terms governing routing and interconnection 21

22 Quality of internet access services Public consultation on the implementation of a system for monitoring the quality of internet access services (23 December February 2012) Objectives - Measure the quality of the services that ISPs provide to their customers This measurement must allow consumers to compare the quality of the services provided by each ISP, for each type of access (xdsl, cable, FTTH) Measurements concern speed, technical performance and usage For the regulator this measurement is intended to act as a preventive monitoring instrument to be able to determine a minimum QoS threshold (Article 22-3 of the Universal Service Directive) The published indicators must be clear for consumers and allow them to make direct comparisons between operators. Special provisions are also planned to ensure the measurements are accurate and objective Methodology: After the public consultation is complete, the list of parameters to measure and the method to be used will be described in detail in a regulatory decision issued by ARCEP. This method is more prescriptive than the one chosen for measuring the quality of fixed services, for which the measurement modalities were left up to the operators and their chosen service provider, under a co-regulation model ARCEP could ask that a second service provider verify that the measurement methods have been followed properly As a result, if certain findings appear abnormal, the Authority could launch a penalty procedure Lastly, if the quality obtained appears insufficient, it could set a minimum QoS threshold Next stage: Adoption of a symmetrical decision in

23 Gathering information on interconnection Public consultation on a quarterly campaign for gathering information on the technical and pricing terms governing interconnection and routing (23 December February 2012) Observation These are markets that can change quickly and involve sometimes complex relationships between ISPs, content, services and applications providers and technical intermediaries such as transit operators and content delivery networks (CDN). Objectives The information gathered will : enable the Authority to deepen its knowledge and understanding of these markets. and, when necessary, help ARCEP perform its duties effectively. cf. purview expanded to include service providers, notably in the area of dispute settlement The information being gathered specifically concerns the terms of interconnection and routing that could have an impact on the French market. The undertakings concerned include operators not physically located in France but which are interconnected with an operator declared in France, and service providers have actively taken steps to have their services or content accessed by French users. Next stages: Adoption of a decision in the first quarter of 2012 First release of information by operators and service providers by 31 May 2012 Concerning data for Q