Free FTTH Transforms the Landscape<< Vodafone's DSL is Not a "Me too" Approach | Main | Vodafone-Fastweb Deal >> IanFogg | September 11, 2006, 05:55 PM Today Free announced it would build a fibre to the home network in France, launching early 2007, with an investment of Euro 1 Billion up to 2012. Initial Thoughts: Wholesale FTTH scale play- By offering wholesale FTTH, Free aims to gain economies of scale, and head off other ISPs from launching competitive networks. This seems to be a key plank in their strategy, and could balance out their aggressive consumer pricing, if they sign on enough major providers on board. The new Free product bundle is evolutionary, and not radically different from their current one: Why? and Why now? - Free's customer acquisition has been slowing over the last 12 months. They have to see high definition TV as an essential part of their product offering in the immediate future to acquire and retain customers in order to justify this FTTH investment. Free's not expecting much upside in terms of per household revenue here: pricing is Euro 29.99 per month, which is little different to current ADSL2+ services. I need to dig down more into their business case; they must have some upside hopes! But, if Free offers this for 29.99 then ADSL ARPU will take another tumble, as we forecast it would. Free Foundation / Digital Divide initiative - Free has something for the public sector in this news, with a free (lowercase) basic service TV/Internet product. The public sector are vital partners for Free to build out its fibre networks through city-owned ducts and other infrastructure. FTTH Competition is certain - France Telecom are bound to react to this and accelerate their current fibre trial. So, whatever happens, France is likely to have at least two major FTTH networks (plus potential smaller networks from players like Citéfibre or Erenis). This will make it much harder for Free to gain a return on investment as they will only enjoy a brief head start on service differentiation. Apple's stores, and other 'over the top' suppliers will have some fun. Internet-delivered movies and TV, Skype, Vonage and others will have a much better served target audience in an FTTH world. One to watch is the net neutrality and fair usage small print that Free may add in to manage this disintermediation risk when the service launches next year. Liberty/UPC made a great decision to sell their French cable operator earlier this year. Cable operators will have to invest significantly to remain competitive with FTTH. Free's press releases: |
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