GENEVA-Stop in for a lunchtime croque monsieur at any of the bistros that line the Boulevard St. Germain in Paris, and you’ll hear a new sound mingling with the clink and clank of plates and glasses. For better or worse, the chirp of the mobile phone finally has become as integral a part of the bustle of old-fashioned French eateries as the swish of waiters’ aprons and the busy hum of gallic chatter.
Two years ago it wasn’t like this. But strong competition in the local market combined with a growing social acceptance of cellular technology has turned Europe’s most reluctant cell phone users into some of the continent’s most ardent mobile aficionados, making France now one of the region’s powerhouses of mobile growth.
With a 1996 GDP of more than US$1.5 trillion, the home of the croissant and the Can-Can is also the world’s fourth largest economy, trailing only the United States, Japan and Germany and well ahead of the United Kingdom and its other European cousins. But to the considerable frustration of Europe’s mobile service providers and equipment makers, the French seemed for years to have an inexplicable aversion to wireless telephony.
In 1996, mobile subscriptions in France hovered around a very modest 2.5 million-much the same as that of Sweden, a country with a population of under 9 million to France’s 60 million and well below half the number of wireless users in the United Kingdom, Germany or Italy.
Not surprisingly, a report released just before Christmas by the European Commission’s Directorate-General IV (DG IV) confirms Germany, the United Kingdom and Italy are leading the pack in terms of both mobile service revenues and number of wireless subscribers, and accounting between them for more than 50 percent of Europe’s total cellular revenues of ECU 28.2 billion (US$33.2 billion).
More interesting, though, is the report’s confirmation of a phenomenal growth spurt in the French marketplace. France has transformed itself from Europe’s slowpoke to become the continent’s fourth-ranked mobile market, generating ECU 3.1 billion (US$36.5 billion) in revenues a year for the country’s three cellular operators, France Telecom, Cegetel-SFR and Bouygues Telecom. What’s more, mobile penetration more than doubled in the twelve months from the end of 1997 to the end of 1998, from 8.5 percent to more than 20 percent.
Following the Christmas rush, when more than 1.5 million people signed up for service in France, subscribers numbered close to 12 million, almost all of whom already are plugged into digital networks.
The secret of the dramatic transformation of France’s mobile communications sector can be explained by several factors. The introduction of competition, initially with the licensing of SFR-Cegetel in 1989 and more recently with the launch of Bouygues Telecom in 1996, has undoubtedly played a major role.
“France had competition in the cellular market relatively early in relation to other European countries, but it was really the introduction of a third operator, in the shape of Bouygues, which finally caused the market to take off,” said Laurent Besancon of France Telecom’s regulatory affairs unit.
Aggressive pricing by the newest entrant soon put paid to the duopoly-style pricing that had been adopted by France Telecom and SFR. Mobile tariffs, once among Europe’s most expensive, plummeted and are now considered among the continent’s best value. Cheaper prices led in turn to an acceleration in mobile uptake, and helped Bouygues win more than 1 million subscribers and a market share of 11.5 percent-still some way behind SFR with 38 percent and the incumbent France Telecom with over 50 percent, but not bad for two-and-a-half years’ effort.
Tim Kelly, chief of operations analysis at the International Telecommunication Union said the explanation for the French market’s turnaround is about more than just economics. “The introduction of real price competition in the French market was important,” he said. “But there were other factors which held France back in the early days. For example, France Telecom initially embraced an obscure mobile standard before moving to more widely accepted technologies. Then Alcatel, the country’s biggest equipment supplier, trailed behind in adopting mobile technology.
“There were other issues too. For example, the size of the country meant network roll-out was slower than in other European countries. The French population is a great deal more dispersed than that of nations like the [United Kingdom] or Germany, which have population densities around twice that of France. With many French still living a rural existence in small, relatively isolated villages, they either didn’t see a pressing need or simply couldn’t get a signal.”
