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France Telecom and Iliad Go Head to Head Over Broadband

Posted on: Saturday, 23 October 2004, 18:00 CDT

FRENCH telecoms companies France Telecom and Iliad have unveiled the fastest broadband internet services in Europe for phone-line subscribers.

The services, which more than double the speed of current offerings, signal the acceleration of competition in France but may not hurt margins, analysts said.

On Wednesday, Free, France's second-largest internet access provider and a unit of Iliad, launched a service of up to 15 megabits per second (Mbit/s), available immediately.

A few hours later, France's dominant carrier, France Telecom, said it would offer up to 18 Mbit/s in Paris from 1 December, before offering it nationally by July 2005.

The offerings constitute a dramatic acceleration compared with speeds currently available. Free offers up to 6 Mbit/s and France Telecom up 2 Mbit/s. France Telecom had announced in September that it would market a service of up to 8 Mbit/s, to be launched in November.

Although new broadband products are being launched at an increasingly fast pace, the competition is unlikely to hurt the bottom lines of companies involved, one analyst said. He noted that the costs of upgrading networks for faster service are marginal and that prices for slower speeds aren't being cut, so profit margins won't be damaged.

Iliad said that its new offering would cost the same as its current fastest service - E30 ($36.90, Pounds 20.70) a month. France Telecom said that its 8 Mbit/s service would cost E5 more than its 2 Mbit/s deal but did not provide prices for its 18 Mbit/s service.

Other internet services in Europe have also boosted speeds. Last week, Italy's Tiscali said it could now offer a 12 Mbit/s service. But most incumbents are keeping much slower speeds. T-Online International, the internet service provider of Deutsche Telekom, currently offers up to 3 Mbit/s in Germany. In the US, internet service providers such as Earthlink typically offer up to 3 Mbit/s. Some telecom carriers in Europe already offer services to consumers faster than France Telecom or Iliad, but they are based on networks of limited scale, such as cable or fibre.

But France Telecom and Iliad's services have the advantage of being on the same copper wire system that routes most voice calls in France, using technology called Asymmetrical Digital Service Line (ADSL).

France Telecom and Iliad use ADSL 2+, a version of ADSL that allows speeds of up to 25 Mbit/s and was approved by authorities on 13 October.

Free says it is the first in Europe to roll out ADSL 2+. But France Telecom said that its launch of the technology on a wide scale was a global record. Neuf Telecom has said it will launch a service based on the technology in early 2005, while the French unit of Tiscali is set to follow quickly, say industry participants.

The number of broadband users in France is rising fast; 5m were online in June, matching Germany's total. Experts say the French number will reach 6m by the end of the year.

BENOIT FAUCON

Dow Jones Newswires

Source: Sunday Business; London (UK)

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