Along with at least 30 other journalists and analysts I spent a morning at an Orange strategy briefing/update titled “Orange In Europe”. This was a title perhaps not intended as a taunt to the Remainer Brits sitting in the audience, but rather a look, as it sounds, at Orange’s European operations and priorities. As well as Group Deputy CEO Gervais Pellisier (GP) , we were briefed by the CEOs of Orange Poland, Jean-Francois Fallacher, and Orange Romania, Liudmila Climoc.
It was noticeable how much of the briefing was spent talking about fixed-mobile convergence, fibre connectivity, TV and “household” connections, rather than say a like-for like line-up of 5G, mobile data, IoT and mobile “subscribers” or “SIMs”. I think this is fairly key.
GP said that there is both mobile-to-fixed and fixed-to-mobile convergence. What he meant by this is that cable companies such as Liberty Global are looking to add mobile assets, while mobile players such as Orange (outside of France) and Vodafone look to add fixed networks.
Fibre seems really to be the access of choice for Orange. Copper is too old and too legacy. Fixed wireless is too expensive apart from for a)some rural areas where fibre is hard to run, or b) as a very limited last hop option (GP). Fibre is a 25 year technology that can offer multi-service capabilities and does not require a year-by-year upgrade schedule. GP did mention 5G – he said it is 4-5 years away, with need driven by capacity constraints in dense areas. (No mention here of new vertical business models, IoT etc etc)
So… fibre and convergence. GP said that 40% of European consumers are “within reach” of Orange’s converged services. Already 83% of Spanish, 51% of French and 41% of Polish customers are“convergent” – ie consume fixed and mobile services from orange.
In Poland, 1.5 million out of a national total of 14 million households can potentially hook up to Orange fibre. Spain and France have a combined 15.5 million households in reach of fibre.
GP: “Convergence is the core of our strategy. We’ve increased revenues in three consecutive quarters and that confirms we have made the right choice. The Spanish figures (the most converged market) are very clear. Other operators that make short term technology decisions will only see short term financial results.”
So Orange is basically all-in on fibre to the household. From there it offers the obvious multi-play services but also views the in-home occupants as a whole. For instance, in its demo space today it was showing its IMS-controlled Multi-SIM same number service. What this does is give you the capability to assign your existing mobile number to other devices – perhaps an old legacy mobile phone or card phone, a tablet or any other device with a SIM in it. In fact, soon the service will be extended to non-SIM devices, meaning you could call in and out of your WiFi tablet using your main mobile number.
There were also demos of Orange’s m-banking and financial services capabilities, and its Family services such as Family Life and Family Tracking.
This is a shift away from “mobile access” to “connected household” – or as Orange somewhat hyperbolically calls it: “an infinitely personalised digital life’.
Clearly, Orange is going to need access to a lot more fibre to fulfil this ambition. It’s wholesale agreement with Telekom in Romania might be one path, as is acquisition – and GP did point out that with some 45 telecoms groups active in Europe, there’s plenty of opportunity there.
So what, I wonder, does this mean to the rest of the network? If the priority is to be fibre-first with WiFi hanging off the end of that (and voice over WiFi included even to non-SIM devices) what is the role of the mobile network? Does it act as an “in between” network only – between home and work? Or will we in fact see changes in usage profiles – perhaps even more mobile usage as we expect to take our lovely in-home “digital lives” (yuck – but you know what I mean) outside with us. With this policy, will Orange in effect risk investing twice in two high speed access networks – a fibre network providing in-premise high speed connectivity and then a high speed mobile network. I think the answer is yes. Can this be mitigated. Probably in two main ways. First, there can be a common core network and service layer. Second, a really expansive fibre network could of course act as a great backbone for a mobile network, including fronthaul/backhaul.
GP was unexpectedly unreconstructed on the EU’s roam like home machinations. First, Orange had clearly backed the proposal that said that any user can avail themselves of a roam like home deal up to 90 days per year. That would have been enough for 97% of all people, he said. It seems like we are legislating on behalf of the 3%, he said. He questioned how fair usage might be enforced, but said that “where you pay your tax” is where you could be judged to be resident, and also said that proof of residency might be required. He also queried why only the telco market is expected to have a flat price across the continent. “You don’t pay the same for a hotel in London as Warsaw”, he said.
It’s to be hoped this was an off the cuff analogy, as it in no way relates to the roaming debate. For a start, the EC is not demanding all mobile tariffs are the same. For a second… well let’s leave this here. People don’t have contracts with hotel chains, they are not reliant on a single “home” chain to bill them for usage while they travel… and so on. Let’s take this comment instead as an indication of the level of resentment that still exists within operators that this legislation exists at all.
GP also said that it was unfair for Southern European countries to be expected to build infrastructure to cater for a short term annual influx of northerners who expect access to high speed mobile data services as part of their existing “home” bundle. Surprisingly, given he was flanked by CEOs from two low ARPU operators – he did not extrapolate on the implications of the relatively high wholesale price that would mitigate this “Southern Dilemma”. A high wholesale price, of course, could see operators from the East paying more in wholesale interconnect than they charge their own retail customers.
Interesting angle here is that Poland is one market where a converged strategy is leading to “telco extensions” as a business model taking off. Jean-Francois Fallacher, CEO, pointed to Orange’s role as a TV provider (762,000 customers), reselling energy (15,000 customers), plus its role as a “real” banker in partnership with mBank (345,000 customers). The operator has already sold 8,000 Smart Home kits – a portfolio of connected devices – so far. It cross-subsidises across this portfolio – offering discounts on the mobile subscription if a consumer also signs up to another service. For instance energ customers get a 10% discount on their mobile bill.
Note that Orange also claims 97% population coverage for LTE in Poland.
Liudmila Ciloc, CEO, Romania said that the operator is in the midst of a EUR500 million network investment programme. There is still a lot of 3G upgrade to take care of, as well as LTE investment ongoing. The operator currently has a total of 74% population coverage in 4G and 96% in urban. In 3G the operator has an active and passive network sharing arrangement with Vodafone – tends to be more active in rural areas and passive in urban. The operator can densify the network singly, as it sees fit.
IOT – the operator has trials running using LoRa technology but also sees a likely transition to NB-IoT by 2018.
The experience of VoLTE – which was first piloted in Romania by Orange – is that it brings two principle customer benefits -much more consistent voice quality and also very quick call set up times. For the operator there is more efficient spectrum utilisation.
A converged strategy brings a big reduction in churn rates.