Published:
05-Feb-10
Orange Spain, owned by France Telecom, has launched a pilot of fibre-to-the-home (FTTH) broadband access in Retiro, Madrid. Residents can sign up for 50Mbit/s symmetrical speeds as part of a triple-play bundle with national fixed calls and IPTV services at €44.95 per month. Installation and activation is initially free to subscribers.
The ISP currently offers broadband access at various speeds up to 20Mbit/s via incumbent Telefonica's network as part of a wholesale DSL deal and its own unbundled LLU network. The 20Mbit/s ADSL2+ triple play package in LLU areas costs €34.95/month (exc sales tax).
Several rival ISPs to Orange Spain have also deployed next-generation broadband (prices quoted exlude sales tax):
- Telefonica: plans to deploy a mix of VDSL via fibre-to-the-cabinet (FTTC) and FTTH, to deliver speeds from 30Mbit/s to 100Mbit/s. By 2012, the provider aims to provide speeds above 10Mbit/s to 70% homes (~11m) and above 25Mbit/s to 25% homes (~0.4m). In July 2009, the incumbent launched a limited pilot of 100Mbit/s using FTTH in two Madrid municipalities although prices are unconfirmed. Telefonica's 30Mbit/s VDSL 3-play bundle costs €85.90 per month
- The largest cableco ONO has rolled out DOCSIS 3.0 speeds up to 50Mbit/s in Madrid and Valencia; financial debt has barred the company from extending this coverage. ONO's cheapest 50Mbit/s 3-play package costs €64.90
- R Cable has upgraded its infrastructure to offer 100Mbit/s in key cities in Galicia; users pay €95.00 for the lowest cost 3-play 100Mbit/s package and €65.00 for the same bundle at 30Mbit/s.
Our take...
The FTTH rollout in Spain continues France Telecom's ambitious strategy: the operator has deployed the network architecture in its home market, Poland (as the incumbent), Slovakia and Switzerland.
The FTTH pilot will test consumer support for very high speed broadband access and high-quality IPTV services charged at a premium, albeit only slight. A strong adoption rate will back a business case for Orange Spain to risk further capital in expanding its FTTH network.
CMT, the Spanish telecoms regulator, ruled in January 2009 that Telefonica is not obliged to offer wholesale broadband access products at 30Mbit/s or over (via its FTTC or FTTH network). As a result, independent telcos including Orange Spain, Jazztel, Tele2 (Vodafone) can only access Telefonica's empty cable ducts or dark fibre - this requires them to invest substantial sums in next-generation network hardware before they can offer FTTH services.
Orange Spain's aggressive pricing policy for its FTTH 3-play product will be welcomed by residents in the municipalities - undercutting all other 3-play bundle offers in the market at both the 50Mbit/s and 30Mbit/s mark (Telefonica, ONO, R Cable). The price point, at only €10 more expensive than the 20Mbit/s DSL bundle, should help encourage those consumers looking for advanced video and broadband services to opt for the top tier FTTH option.
While several providers have highlighted they are unconvinced of consumers' actual demand for 50Mbit/s, promoting this high-speed in packages can act as an effective marketing tool to lure customers. Further, advertising the 50Mbit/s speed only within a 3-play bundle - rather than standalone or within a 2-play bundle - helps to maximise ARPU. Evidence also suggests subscribers taking multiple services from a single provider are less likely to churn.
Assuming the FTTH package saw widespread availability at this competitive price point, this could help reverse the decline Orange Spain has seen in its broadband subscriber base every quarter but one since Q3 2008. According to Screen Digest, the ISP claimed a total of 1.09m at Q3 2009 giving it a retail broadband market share of 11.6%, down from 13.5% YoY.
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