French Government Pledges US$2.9 bil. in Loans to Boost Broadband Roll-Out

The French government has pledged to plough some 2 billion euro (US$2.9 billion) into the development of high-speed broadband, as part of a national loan programme designed to boost the country's economy through investment in infrastructure, Dow Jones reports. Prime Minister Francois Fillon announced the funding, saying the government would make a series of low-interest loans available to operators, chiefly to boost the roll-out of fibre-optic (FTTX) broadband next-generation networks (NGNs) outside the major metropolitan areas.
Under the proposals, fixed-line operators including France Telecom, Vivendi's SFR and Iliad will be encouraged to invest together to build local FTTX networks, ensuring that no single operator has a monopoly in a particular area. The funding will be offered on a project-by-project basis, and is part of a wider national loan programme totalling some 35 billion euro, which includes 4.5 billion euro earmarked for information and communications projects.
The prime minister added that a satellite would be developed over the next few years to allow high-speed Internet access to the most remote regions, and also called for the development of a low-cost Internet connection for poor households at around 20 euro a month, compared with the current rate of around 30 euro.

Outlook and Implications

• Driving High-Speed Broadband in France: Currently the three leading French fixed-line operators are deploying limited FTTX networks in heavily built-up areas only, such as the capital Paris, but these roll-outs have failed to make it beyond all but the largest cities, partly due to ongoing confusion concerning regulation in the country. Although regular high-speed broadband is available in most of the country, chiefly via ADSL, Prime Minister Fillon estimated that some 500,000 French citizens still don't have access to high-speed Internet, saying this was not acceptable. The government wants to bring high-speed Internet to smaller cities and rural areas in order to boost productivity, but operators are not keen on rolling out FTTX to these areas as there are fewer potential customers, and still some questions concerning the cost of such an undertaking. The investment should allay some of these fears, and the government is hoping this injection of funds will encourage operators to invest 6–7 billion euro of their own money into France's fibre networks, and kick-start sluggish investment in FTTX.
• Regulatory Obstacles Remain: Investment in NGN's has suffered considerably due to the economic slowdown in France, as increases in competition and regulation push the operators to breaking point, with an increasingly desperate price war currently brewing in the country's fixed-line triple-play sector (see France: 7 December 2009: Bouygues Set to Cut Prices as French Price War Heats Up—Report). France Telecom has recently stated that it sees high-speed broadband rollout as its key strategy in the country's saturated markets (see France: 20 November 2009: France Telecom CEO to Focus On Broadband as Government Hints at US$3-bil. Investment), but the government says that despite some 11% of French households having access to FTTX, relatively few of them have signed up for the service. Although the three leading fixed-line operators France Telecom, Vivendi's SFR, and Iliad are carrying out experiments in shared fibre roll-out in three regions near Paris, these are somewhat limited, and former incumbent France Telecom in particular has been shy to invest without some regulatory pledges that it will be able to get a fair return on its investment if it is forced to open these networks to rivals. Despite the funding pledge, France's regulator must also act to allay operators' fears, if it hopes to bring broadband connectivity and competition in French telecoms up to the level of its European neighbours.