The Orange Miracle

Fr-lgflag Jesus multiplied bread loaves and fishes. In the bible, the story is told of how he fed 5000 with only 2 fishes and five loaves of bread.

Earlier this week, France Telecom CEO Stéphane Richard went one better and mutliplied homes. Homes passed, that is. France Telecom announced an ambitious plan for FTTP deployment. The plan involves an investment of €2bn in the next five years to cover 3600 cities or towns with fiber to the home, which represents 60% of the population of France or 15 million homes. France Telecom's previous FTTP plan, announced two years ago, was less ambitious with only 350 cities covered, representing 40% of the population and 8 million homes. That previous plan represented an investment of… €2bn.

Exactly how Richard expects his teams to connect 15 billion homes spending only €2bn is where the miracle lies. That means FT has found a way to deploy FTTH on a wide geographical basis for an average cost of €130 per home. Until now, the lowest figure I had seen in the world was a provisional 5 year costing that BSNL had announced for their deployment in India (at $160, roughly equivalent).

Interestingly enough, the French press doesn't seem to have picked up on exactly how improbable the plan is. When challenged, France Telecom says that these plans are taking into account co-investment by competitors. Except competitors haven't commited to anything. Except FT shot down two years ago a solid proposition to co-invest in a network company that would allow open access to all competitors.

The interesting question is "why is France Telecom announcing such a ridiculous plan?" I have no official answer to that, so all I have left is speculation:

  • one theory is that he government is behind the announcement. It's actually fairly plausible considering the number of promises not followed by hard cash that this government has made. It is rumoured that Eric Besson, the newly appointed Minister in charge of Industry, Energy and Digital Economy would like to see a bigger number than "40% of the population covered" in newspaper headlines, especially 18 months prior to the next presidential election.
  • another more scary theory is that this move prevents money earmarked as part of the Grand Emprunt (the €2bn for investment in underserved areas) from being spent in the periphery of large cities. FT's original plan was really dense urban and not much else. The new plan promises wide coverage in suburbs and urban periphery, which means that the local governments in these areas can no longer vie for public subsidies in FTTH deployment. Unlike the EC's State Aid guidelines, the Grand Emprunt has no rule to assess whether private deployment intentions are real.

I'm torn between grudging admiration at the deviousness and shameless boldness of such a ludicrous announcement and anger that this is once again a delaying tactic. In five years, when less than half of these homes (if we're lucky) have been connected to the network, the government (the same or another) will again make announcements saying that the targets weren't ambitious enough when in actual fact the issue isn't with the target, it's with the arrow and who is expected to shoot it.