ARCEP publishes the observatory for electronic  communications markets in France as of Q3 2011

Paris, 11th January 2012

Traffic up, revenue down

The revenue generated by the electronic communications retail market (excluding operators’ supplementary income) came to €10.2 billion in the third quarter of 2011, which marks a 2.7% decrease over the previous year.

Consumption levels, on the other hand, are up across the board:

  • fixed and mobile telephony traffic (51.4 billion minutes) increased by 2.8% compared to the previous year;
  • the number of person-to-person messages continues to rise sharply, with 35.7 billion SMS sent during the quarter (+10.5 billion over the previous year);
  • data traffic on mobile networks rose by 100% compared to Q3 2010.

This increase in traffic has nevertheless gone hand in hand with a steady decrease in prices, and a decline in revenue which is due to a large degree to the change in the VAT rate that came into force on 1st February 2011.

Voice over broadband (VoBB) subscriptions now outnumber PSTN subscriptions

The revenue generated by narrowband fixed services continued to decline in Q3 2011 (-14.2% compared to the previous year) and is not being offset by the increase in broadband and ultra-fast broadband revenue (+7.3% compared to the previous year). Broadband and ultra-fast broadband now account for close to two thirds of fixed services revenue: specifically 62%, or 6 points more than the previous year.

All told, fixed services revenue came to €4 billion in Q3 2011, which marks a 2.1% decrease over to the previous year.

Voice over broadband continues to gain in popularity and VoBB subscriptions now outnumber subscriptions to classic POTS lines. Totalling 16.8 billion minutes, voice over broadband traffic now accounts for two-thirds of the calling traffic on wireline networks. And it is rising dramatically – by an additional 2.9 billion minutes compared to Q3 2010 – which can be largely attributed to a tremendous increase in calls to mobiles (+2.1 billion more minutes than the previous year).

The successive decreases in mobile call termination charges ordered by ARCEP – down to €0.02 on 1st July 2011, then to €0.015 on 1st January 2012 – have made it possible to extend high-volume offers to fixed-to-mobile calls.

This has had a profound impact on users’ calling habits: the amount of calls being made to mobile networks practically quadrupled compared to the previous year. As a result, the percentage of fixed-to-mobile calling minutes initiating on VoBB lines equalled the volume of national calls in Q3 2011, accounting for two thirds (64%) of calling minutes originating on fixed lines.

The number of broadband and ultra-fast broadband accounts stands at 22.4 million as of Q3 2011 – of which 600,000 are ultra-fast broadband subscriptions – which marks an annual increase of 1.5 million since the end of 2010.

ARCEP’s efforts to decrease call and SMS termination rates enabled the development of high volume offers, which have been pivotal in driving up traffic on mobile networks

The number of mobile service customers (calculated by SIM cards in service) stood at 67 million in September 2011, which translates into a penetration rate of 103.3% or a six-point increase over the previous year (+4 million cards). Mobile virtual network operators (MVNO) are becoming a stronger presence: their market share stood at 10.7% (12.6% in the residential segment) in September 2011, which marks a 1.4 point increase in a single quarter. They also account for 90% of new customers during the quarter.

The revenue generated by mobile services (€4.8 billion) was down by 3.4% compared to Q3 2010. This is due in part to the change in the VAT rate applied to audiovisual services starting on 1st February 2011 and to a decrease in prices. Because mobile operators chose not to carry the increase in the VAT rate (which went from 5.5% to 19.6%) over to their retail prices (incl. VAT), their before-tax income for 2011 has been cut by several million euros. In addition, the introduction several months back of mobile plans that do not include a handset – which was in fact one of ARCEP’s recommendations in support of consumers – has directly influenced customer’s monthly invoices and so operators’ income as well. Meanwhile, consumption levels continue their steady rise thanks to the increase in offers that include unlimited or high-volume components, for either calls (+2.7% over the previous year), which are aimed mainly at heavy users, mobile data traffic (+92.6%) or text messages (+42%).