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France the Latest Showcase for National Fibre Public Funding

The French are good at ‘doing’ infrastructure. The country takes pride in a civil service which has been progressively centralised since the efforts of Cardinal Richelieu in the mid-17th century. The well-funded health system is among the best in Europe. The generously subsidised rail service, the SNCF, also rates highly. These and other components of the modern French State cost money, and the government has rarely proven shy in supporting big ideas, particularly if they are so readily equated with public welfare and benefit.

Most European countries realise that during the next few decades one of the most important areas in which to keep ahead—in terms of economic and social welfare—is in their NGN infrastructure. More specifically, they are considering (and in some cases legislating for) broadband to be a public utility, available to all citizens at a guaranteed data rate.

The French government has now committed itself to investing €4.5 billion to support the rollout of a fibre-based telecom network and the development of a range of e-services (teleworking, telemedicine, health, government, justice, education etc) which can exploit the network’s potential. The funds form part of a larger €35 billion bond issue announced by President Sarkozy last month: known as the ‘grand emprunt’, the government plans to pay for large-scale public projects through public debt in a bid to increase economic growth from 2010 and ease the country out of the continuing global economic crisis. The scale of the loan has been hotly debated, with some pundits suggesting upwards of €50 billion or €100 billion is a necessary expenditure in research, infrastructure and technology.

For now, the government is concentrating on a number of priorities, including education, research, the digital economy, and industry. As for broadband infrastructure alone, the government plans to spend €2 billion to enable up to 70% of the population to access at least 100Mp/s services by 2019. Public funding, it is hoped, will by supplemented by up to €4 billion from the private sector. The government’s own €13 billion contribution towards overall infrastructure investment equals the amount which it has received from French banks in repayment of special funds extended to them in late 2008 and 2009, at the height of the economic crisis.

France already has one of the most competitive fibre markets in Europe, with a number of major competing players (Numéricable, Free, France Telecom, SFR). To extend fibre to less commercially viable areas, a national fund will make loans to operators for shared infrastructure deployment. This will be based on legislation fined-tuned since 2007 and culminating in the August 2008 Economic Modernisation Law (‘Loi de modernisation de l’économie’ - LME), which included provisions for sharing the end part of networks, a part which cannot be economically duplicated.

In essence, the LME provides the right to fibre: it will be mandatory to furnish new buildings with over 25 units with fibre from 2010, and for all others from 2011. The LME also stipulates that operators must share the last section of fibre networks with other providers on transparent and non-discriminatory terms, and under reasonable economic, technical and access conditions.

The LME soon had concrete results: in December 2008 Numéricable, Orange and SFR signed an agreement setting out the conditions for sharing fibre in buildings installed by any of them. They agreed to implement a ‘single mode’ solution in areas where they currently deploy or planned to deploy their networks, with residents able to choose from amongst the three operators, while also deploying ‘multi mode’ fibres in parts of Paris and neighbouring towns so that each operator can connect to their network at the shared access point. The agreement, fined tuned in June 2009 to settle remaining technical and financial issues, is also open to other operators who want to become involved. Other measures (mainly relating to response times etc) will be resolved by the regulator within the next few months.

In addition to obligations set down by the LME, a public-private partnership is expected to be formed to provide fibre to 750,000 rural homes by 2014.

Within Paris itself, where Free has targeted 100% coverage by the end of 2010 and SFR 80% coverage, revenue derived from a tax on fibre installations (by the metre) will go towards providing 400,000 low-income households (20% of the city’s population) with FttH by 2012.

These plans are truly ambitious, and worthy. As with Finland and Sweden, which have also developed impressive national fibre schemes, France has become the latest market to watch, and learn from.

By Paul Budde, Managing Director of Paul Budde Communication

Paul is also a contributor of the Paul Budde Communication blog located here.

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