Blame the regulator!

I reported last month how Orange announced that their fiber roll-out in France was a year behind schedule. Nastier commentators than myself would suggest that for a project that really kicked off a year ago, that's a bit worrying... Regardless, it's a fact that the French incumbent is not visible on this market and doesn't give many outward signs of wanting to be more visible, to customers and industry players alike.

Admittedly, these are not the best of times to announce that you will be investing large amounts of money to bring your access network into the 21st century. And indeed, while Free seems to be chugging along in connecting Paris (though not connecting many customers at this stage, to say the least) Neuf/SFR also seems also very quiet on these issues. In other words, not a lot that's visible is happening in the field of fiber to the home in France, despite a lot of international attention on the topic.

I was nonetheless surprised to read last week that Dider Lombard (Head Honcho at Orange) blames regulatory uncertainty for the delays. While not every crease on the regulatory shirt has been ironed out, calling that uncertainty is disingeneous to say the least, especially when the regulatory conditions set are very largely considered to be favourable to the incumbent: altnets wanted unbundling at the CO and bitstream. They got neither and instead the regulator has settled on open access to ducts and unbundling at the building. This means that the game will largely be played on investment capacity and pre-existing duct network, which are both Orange's strong suits in the French market.

Sure, the exact modalities of in-building sharing of the wiring remain to be decided upon, but is that really a major hindrance to investing? Of course not. Orange has the guarantee that they will not have to share their investment with competitors, which is what they wanted in the first place.

My take on what's really happening is that Orange is still struggling for a business case. They are realising that their premium content strategy unfortunately comes at the worse possible time when customer discretionary spending is likely to be curtailed for the next couple of years, and I suspect that even even with very optimistic revenue projections for premium content, the fiber roll-out still doesn't pay for itself in less than 10 years or more. Which is unacceptable for a telco, especially in the current market conditions.

Of course, Orange can't come out and say they don't have a business case or people will ask them where it went since they said they had one 18 months ago. So they take the easy way out: blame the regulator!

Also posted on www.fiberevolution.com