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Observatory / Services market observatory

The electronic communications services market in France / 2nd quarter 2005 / November 2005

Last update 15th February 2006
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Introduction

In accordance with the new regulatory framework for electronic communications, the Market Observatory was expanded in early 2005. The Observatory now covers all ISPs (already included in the Observatory since early 2004) as well as data carriers.

Fixed telephony and Internet

There were 35.3 million subscriptions to telephone service at the end of the second quarter 2005. The numbers increased slightly over one quarter (+0.6%), because of the development of subscriptions to Voice on IP services (1.9 million). Of the 275 000 additional lines unbundled during the second quarter, 100 000 lines were fully unbundled. The volume of traffic originating on fixed networks increased once more for the second quarter in a row, whereas it had been declining since the third quarter of 2003 (seasonally adjusted figures).

All access providers reported total Internet revenues of €795 million. High speed now contributes 75% of this amount. The number of Internet subscriptions declined slightly (-0.4%) over the previous quarter because of the rapid decline in the number of pay-as-you-go accesses. This type of subscription is now marginal in terms of traffic. On the other hand, flat-rate packages (both dial-up and high speed) continue to grow in popularity, thanks to the dynamism of high speed. High-speed Internet accesses are up strongly with over half a million new subscriptions during the second quarter 2005. The number of ADSL accesses increased 64% over one year and represent a full 60% of Internet subscriptions. The number of cable accesses rose by 22% over the same period. The average monthly invoice for an ADSL high-speed subscription remains higher than a cable subscription (€25.10 compared with €19.30).

Mobile telephony

The number of subscriptions to mobile telephony topped the 45 million mark in the second quarter 2005.

The mobile operator interconnection market continued to be affected by the end of the bill-and-keep system. Until the end of 2004, mobile operators did not bill each other for call termination. Billing was introduced on 1st January 2005, generating significant additional revenue on the interconnection market.

The end of "bill & keep" has also caused a shift in traffic in the retail market: since early 2005, the volumes of Calls to mobile phones on the same network rose while they declined to other call destinations.

Note: Revisions may be made to a quarter’s data from one issue of the Observatory to the next because of corrections made by operators in their reports. Any discrepancies between annual growth as a % and values are caused by rounding.

1 The communications market as a whole

1.1 The end customer market

The perimeter of the Observatory was expanded in early 2005 and now includes all Internet access providers and data transport operators. Internet revenues under this new perimeter are shown in the table below since early 2004. On the other hand, ARCEP cannot provide historic data for data transport revenues for 2004.

Telephony and Internet revenues increased 4.3% over the second quarter 2004. The decline in fixed telephony revenues (-3.9%) is offset by increases in revenues from mobile telephony (+8.7%) and Internet (+19.2%). Measured on a comparable basis, that is, excluding data transport, the entire electronic communications market grew by about 5%.

Revenue (in millions of euros)

Q2 2004

Q3 2004

Q4 2004

Q1 2005

Q2 2005

Change
Q205/Q2 04

Fixed telephony 1

3 174

3 105

3 123

3 028*

3 049

-3.9%

Internet

667

653

709*

753*

795

+19.2%

Mobile telephony 2

3 616

3 786

3 780

3 829*

3 932

+8.7%

All telephony and Internet

7 457

7 544

7 612*

7 610*

7 776

+4.3%


Advanced services

422*

427

445*

545*

509

+20.7%

Leased lines

542

554

566

565

570

+5.1%

Data transport 3

130

147

155

496*

531

n.s.

Directory services, directories and advertising

70*

73*

73

69

76

+8.3%

Hosting and call centre management

7

7

7

25

24

n.s.

Terminals and equipment 4

472

629

625

512

483

+2.2%

Entire market

9 101*

9 381*

9 483*

9 822*

9 968

n.s.

* adjusted figures

______________
1 This indicator covers the revenues from access fees and subscriptions, of calls from fixed lines excluding Internet connection calls, public telephones and cards.
2 This item includes data transport on mobile networks (in particular SMS).
3 The indicator includes only revenue from data transport originating on fixed lines. Data transport on mobile lines is included in the overall total for mobile telephony.
4 This market does not really fall under the telecommunications services market. Since registered operators contribute little to this market, this indicator gives only a partial idea of total figures.

Volumes (in millions of minutes)

Q2 2004

Q3 2004

Q4 2004

Q1 2005

Q2 2005

Change
Q2 05/Q2 04

Fixed telephony

25 828

24 009

26 547

27 573*

26 323

+1.9%

Internet (dial-up)**

13 911

12 192

12 081

10 905*

9 983

-28.2%

Mobile telephony

18 258

18 552

19 481

19 684

20 414

+11.8

Total telephone service and Internet

57 997

54 753

58 109

58 162*

56 720

-2.2%

Of which telephone service (fixed and mobile)

44 086

42 561

46 028

47 257*

46 736

+6.0%

* adjusted figures.
** data reported by all Internet access providers (IAPs) (cf. ARCEP – Internet Observatory 2004).

Internet under former framework: revenues of operators licensed under the former regulatory framework until Q2 2004
Internet under new framework: revenues of registered operators under the new regulatory framework (beginning Q1 2004)

1.2.1 The total market

The strong rise over one year in the revenues of mobile operators for interconnection services results from the additional revenue generated by the end of the "bill & keep" system. The series of revenues for wholesale Internet services marks a break in the first quarter 2005 over previous quarters because of a change in the questionnaire (inclusion of options 3 and 5, traffic delivery at the regional and national levels).

Revenues (in millions of euros)

Q2 2004

Q3 2004

Q4 2004

Q1 2005

Q2 2005

Change
Q2 05/Q2 04

Interconnection services*

1 523

1 552

1 470

2 113*

2 198

+44.3%

of which fixed operators*

721

725

744

771*

813

+12.8%

of which Internet

83

62

66

199*

192

+130.9%

of which dial-up Internet

37

33

32

24*

21

-42.8%

of which mobile operators

719

765

660

1 143

1 194

+66.0%


Volumes (in millions of minutes)

Q2 2004

Q3 2004

Q4 2004

Q1 2005

Q2 2005

Change
Q2 05/Q2 04

Interconnection services *

37 233

36 574

39 565

39 365*

39 590

+6.3%

of which fixed operators**

21 531

21 429

23 701

24 863*

25 419

+18.1%

of which dial-up Internet

8 246

7 557

8 250

7 196*

6 432

-22.0%

of which mobile operators

7 456

7 588

7 615

7 305

7 740

+3.8%

* adjusted figures.

Notes:
- Interconnection revenue and volumes are not based on the same perimeter, making it inappropriate to compare these indicators when estimating average prices (interconnection revenue includes fixed revenue such as payments for connection and services to operators).
- Interconnection includes all services provided to operators by operators under interconnection agreements. In the event of mergers or concentration of enterprises, some of the flows between the firms disappear, which could explain decreases from one quarter to the next.
- Please note that the interconnection figures above may be counted twice, in particular for fixed operators.
- The "Bill & Keep" system: until the end of 2004, mobile operators did not bill each other for call termination services. Billing began on 1st January 2005, generating additional revenue.

1.2.2 Incoming international traffic

Revenue (in millions of euros)

Q2 2004

Q3 2004

Q4 2004

Q1 2005

Q2 2005

Change
Q2 05/Q2 04

Incoming international interconnection services

243

251

238

229

242

-0.4%

of which fixed operators

207

207

195

195

204

-1.4%

of which mobile operators

37

43

43

34

39

+5.4%


Volumes (in millions of minutes)

Q2 2004

Q3 2004

Q4 2004

Q1 2005

Q2 2005

Change
Q2 05/Q2 04

Incoming international interconnection services

1 660

1 751

1 677

1 818*

2 085

+25.6%

of which fixed operators

1 429

1 466

1 415

1 564*

1 776

+24.3%

of which mobile operators

231

285

262

255

309

+33.7%

* adjusted figures

The volume of interconnection services for fixed termination of incoming international traffic grew strongly over the past two quarters: +150 million minutes between the 4th quarter 2004 and the 1st quarter 2005 and +210 million minutes between the 1st and 2nd quarter 2005.

The volume of termination on mobile networks increased by 50 million minutes between the 1st and 2nd quarter 2005. Part of the increase in mobile termination traffic, estimated at 9.3 percentage points, is due to the growth in the number of customers.

Over one year, traffic grew 24.3% for termination on fixed networks and 33.7% on mobile networks.

In this period, revenues changed little, and are not in phase with traffic development.

______________
5 This market segment is a subset of the total market (cf. 1.2.1)

1.2.3 Mobile operator roaming-in

Q2 2004

Q3 2004

Q4 2004

Q1 2005

Q2 2005

Change
Q2 05/Q2 04

Revenue in millions of euros

209

289

177

194

211

+1.2%

Volume in millions of minutes

335

422

266

307

348

+3.8%

Note: In roaming-in, a French mobile operator carries calls made and received in France by the customers of foreign mobile operators

2 Market segments

2.1 Fixed telephony

2.1.1 Access, subscriptions and fixed lines

Access revenue (millions of euros)

Q2 2004

Q3 2004

Q4 2004

Q1 2005

Q2 2005

Change
Q2 05/Q2 04

Access fees, subscriptions and additional services

1 354*

1 366

1 374

1 354

1 431

+5.6%

Until 2004, the Observatory used an indicator called "number of fixed lines", which was actually the number of subscriptions on the switched telecommunications network (STN).

More precisely, on traditional analogue lines, such as those serving homes, each line supports a single subscription to the switched telephone network. However, on digital lines, which most often serve businesses, one physical line can support up to 30 telephone channels, equal to the "maximum number of possible simultaneous calls" (also the "number of lines equivalent to 64 kilobits per second"). In this case, 30 channels are counted in the "number of fixed lines" item.

The indicator we used until the end of 2004 did not specifically state that these lines supported telephone service. Beginning in 2005, the indicator is now the "number of fixed lines supporting telephone service". Still, despite this clarification, these two series remain the same, because currently, the number of fixed lines not supporting telephone service is practically zero. The number of fixed lines supporting telephone service has decreased by 1.2% in one year, because of the decrease in the number of analogue and digital lines in service. On the other hand, the number of lines allowing telephone service via cable increased significantly in the past year (+26.7%).

Number of fixed lines (units)

Q2 2004

Q3 2004

Q4 2004

Q1 2005

Q2 2005

Change
Q2 05/Q2 04

Number of fixed lines

33 804 447

33 760 323

33 972 333

of which cable

62 791

64 296

68 971

Number of fixed lines supporting telephone service

33 574 769*

33 399 373

-1.2%

of which analogue or digital lines

33 501 640*

33 319 520

of which WLL

291

290

of which cable

72 838

79 563

+26.7%

* adjusted figures

Since early 2005, the Observatory has also been monitoring the number of "subscriptions to telephone service" on these lines, since there can be more than one subscription to telephone services on the same line (such as a "traditional" STN subscription and a subscription to Voice on IP). Because of the expansion of unbundling, the number of subscriptions to telephone service has increased slightly. The decrease in the number of subscriptions on the analogue or digital lines (-200 000 subscriptions in one quarter) is more than offset by par the development of Voice on IP (VoIP) services (+27% in one quarter, for 400 000 subscriptions additional) and telephone services via cable (+9% in one quarter).

Subscriptions to telephone service (units)

Q2 2004

Q3 2004

Q4 2004

Q1 2005

Q2 2005

Change
Q2 05/Q2 04

Number of subscriptions to telephone service (voice)

35 101 687*

35 337 540

of which analogue or digital lines

33 501 640*

33 319 520

of which IP DSL

1 526 918

1 938 167

of which WLL

291

290

of which cable

72 838

79 563

* adjusted figures

Explanation of the telephone service on IP or "calls originating on VoIP services" indicators

On the terminology used:

The indicators for telephone service on IP in this issue cover voice on high-speed regardless of the medium (primarily IP DSL, but also IP on cable) and voice on Internet when the operators are registered with ARCEP.

ARCEP designates as "voice on high speed" fixed telephony services using VoIP technology on an Internet access network whose bitrate exceeds 128 kbit/s and whose quality is controlled by the operator providing it; and by "voice on Internet" voice communications services using the public Internet network and whose quality of service is not controlled by the operator providing it.

Calls originating on VoIP services counted in the Observatoire correspond to services at the access level. These indicators do not correspond to the traffic using the Internet protocol only on the network core.

The Observatory does not survey unregistered operators providing voice on Internet between PCs. These operators are not currently covered by the scope of the survey.

On the perimeter of the indicators:

The Observatory distinguishes between calls originating on telephony on IP services and other voice calls. Still, while the volume of VoIP calls covers all of this traffic on the end market, the corresponding revenue covers only invoiced VoIP traffic (e.g. as a supplement to a multi-play package).

Number of indirect connections (units)

Q2 2004

Q3 2004

Q4 2004

Q1 2005

Q2 2005

Change
Q2 05/Q2 04

Number of indirect connections

7 915 566

7 896 331

7 930 294

8 351 140*

8 676 723

+9.6%

of which call-by-call selection

2 794 075

2 629 584

2 554 188

2 477 856*

2 578 990

-7.7%

of which pre-selection

5 121 491

5 266 747

5 376 106

5 873 284*

6 097 733

+19.1%

Note: Call-by-call selection figures cover only active subscriptions. Pre-selection figures cover only subscriptions in service, net of cancellations.

Unbundling (units)

Q2 2004

Q3 2004

Q4 2004

Q1 2005

Q2 2005

Change
Q2 05/Q2 04

Number of unbundled lines

749 542

1 050 293

1 535 650

2 044 851

2 320 504

+209.6%

of which partially unbundled lines

735 811

996 777

1 442 781

1 885 235

2 059 440

+179.9%

of which fully unbundled lines

13 731

53 516

92 869

159 616

261 064

+1801.3%

The number of unbundled lines reached 2.3 million at the end of the second quarter 2005, for over 200% growth over one year. More than 100 000 additional lines were fully unbundled during the second quarter 2005.

2.1.2 Calls from fixed lines (excluding public payphones and cards and excluding Internet

Since the first quarter 2005, the Observatory distinguishes between calls originating on telephony on IP services and other voice calls. Still, while the volume of VoIP calls covers all of this traffic on the end market, the corresponding revenue covers only invoiced VoIP traffic (e.g. as a supplement to a multi-play package). In the second quarter 2005, calls originating on VoIP services represented close to 7% of the total volume of calls on fixed lines.

Revenue* (millions of euros)

Q2 2004

Q3 2004

Q4 2004

Q1 2005

Q2 2005

Change
Q2 05/Q2 04

National calls excluding fixed to mobile

904

849

887

879*

816

-9.7%

of which local calls

581

546

561

of which long-distance calls

322

302

326

International calls

168

167

161

164

160

-4.9%

Calls to mobile phones

627

586

584

532*

528

-15.9%

All calls from fixed lines

1 698

1 601

1 632

1 575*

1 503

-11.5%

of which calls originating on VoIP services

N/A

N/A

N/A

16

22

-

* adjusted figures

Volumes (millions of minutes)

Q2 2004

Q3 2004

Q4 2004

Q1 2005

Q2 2005

Change
Q2 05/Q2 04

National calls

21 116

19 359

21 958

22 948*

21 561

+2.1%

of which local calls

14 402

12 995

14 754

of which long-distance calls

6 714

6 364

7 204

International calls

1 066

1 010

1 029

1 021*

1 008

-5.5%

Calls to mobile phones

2 938

2 883

2 893

2 907*

3 034

+3.3%

All calls from fixed lines

25 120

23 252

25 879

26 876*

25 603

+1.9%

of which calls originating on VoIP services

N/A

N/A

N/A

1 527

1 802

-

* adjusted figures.

Notes:

-The volumes and revenues of local calls do not include Internet access calls. The breakdown of revenues between local and long-distance calls in 2004 is an ARCEP estimate.

-For 2004, the volumes and revenues of calls originating on VoIP services are included in each of the market segments (national, international and to mobile phones). They represented relatively small amounts until the 4th quarter 2004.

The volumes of calls originating on fixed lines grew 1.9% over one year. The volume of traffic originating on fixed lines increased for the second consecutive quarter (cf. page 25), in seasonally adjusted figures.

Despite this increase in traffic volume, revenues from calls originating on fixed phones continued to decline (-11.5% over one year).

2.1.3 Telephone cards and public payphones

Subscriber cards and prepaid cards

Q2 2004

Q3 2004

Q4 2004

Q1 2005

Q2 2005

Change
Q2 05/Q2 04

Revenue (in millions of euros)

51

60

54

52*

57

+10.1%

Volumes (in millions of minutes)

423

460

437

495*

499

+18.1%

* adjusted figures

Public payphones

Q2 2004

Q3 2004

Q4 2004

Q1 2005

Q2 2005

Change
Q2 05/Q2 04

Revenue (in millions of euros)

70

75

63

46*

59

-15.6%

Volumes (in millions of minutes)

286

297

230

203*

221

-22.7%


Q2 2004

Q3 2004

Q4 2004

Q1 2005

Q2 2005

Change
Q2 05/Q2 04

Number of public payphones at end of quarter (units)

189 079

191 794

189 339

178 369

176 258

-6.8%

2.2 Internet

The provision of Internet access (including the provision of related services) generated €795 million in revenues in the second quarter 2005, for an increase of 19.2% over the second quarter 2004. With €586 million, the revenues of high-speed access (up 43.3% over the same period) now represents close to three-quarters of all Internet revenues.

Revenue
(registered operators under the new legal framework) (in millions of euros)

Q2 2004

Q3 2004

Q4 2004

Q1 2005

Q2 2005

Change
Q2 05/Q2 04

Total Internet revenue

667

653

709*

753*

795

+19.2%

of which dial-up

204

177

168

147*

132

-35.5%

of which high-speed

409

424

472*

536

586

+43.3%

of which other revenue

54

52

69

69*

77

+43.2%

* adjusted figures

Note: The revenues of registered operators (all ISPs) correspond to revenues for services billed to the end customer.

The "other Internet revenue" line for the four quarters of 2004 is an Observatory estimate. It corresponds to IAPs’ additional Internet access revenue from such things as site hosting and on-line advertising or income from terminal sales and rentals.

The number of Internet subscriptions reached 12.3 million at end June 2005; of these, 7.9 million are high-speed accesses (ADSL, cable, WLL, etc.). Over one year, the number of high-speed subscriptions grew 60.7%, more than offsetting the decline in dial-up subscriptions (-29.4%), so that the total number of subscriptions grew 10.3% over one year.

Still, with respect to the previous quarter, total Internet subscriptions slipped slightly (-0.4%), and the dynamism of demand for high speed barely balanced out the decrease in demand for dial-up, marked by a particularly brutal decline in the number of "pay-as-you-go" access accounts. The total number of flat-rate packages (dial-up and high speed) continues to grow (+3.7% over one quarter).

Internet subscriptions (units)

Q2 2004

Q3 2004

Q4 2004

Q1 2005

Q2 2005

Change
Q2 05/Q2 04

Total Internet subscriptions

11 141 458

11 308 326

11 969 063*

12 345 335*

12 291 122

+10.3%

Dial-up Internet free access accounts subscriptions

2 549 824

2 475 512

2 390 546

2 277 955

1 852 546

-27.3%

Dial-up Internet flat rate subscriptions

3 680 221

3 335 119

3 015 976

2 737 403*

2 545 290

-30.8%

High-speed subscriptions (cable, xDSL, WLL, etc.)

4 911 413

5 497 695

6 562 541*

7 329 977*

7 893 286

+60.7%

* adjusted figures.

2.2.1Dial-up Internet

The revenue and traffic volumes for dial-up Internet access continue to decline because of the significant decline in the number of subscriptions (-29.4% over one year) which fell from 6.2 million at end June 2004 to 4.4 million at end June 2005. Revenues declined by 35.5% and volumes by 28.2%. This decline also concerns both dial-up access flat-rate packages and pay-as-you-go accounts.

Revenue
(operators registered under the new regulatory framework) (in millions of euros)

Q2 2004

Q3 2004

Q4 2004

Q1 2005

Q2 2005

Change
Q2 05/Q2 04

Revenue of dial-up Internet

204

177

168

147*

132

-35.5%

of which flat-rate packages

157

135

124

106

99

-37.2%

of which free access accounts

47

43

45

41*

33

-29.7%

* adjusted figures.

Volumes
(operators registered under the new regulatory framework) (in millions of minutes)

Q2 2004

Q3 2004

Q4 2004

Q1 2005

Q2 2005

Change
Q2 05/Q2 04

Volumes of dial-up Internet

13 911

12 192

12 081

10 905*

9 983

-28.2%

of which flat-rate packages

11 855

10 413

10 285

9 310*

8 626

-27.2%

of which free access accounts

2 056

1 780

1 796

1 600*

1 358

-34.0%

* adjusted figures.

Note: We distinguish between two types of subscription for dial-up Internet access for the end customer:

  • the customer pays a flat rate for unlimited Internet access to the IAP
  • the customer has a so-called "free" account (with no monthly charge) with an IAP and pays only for the time actually consumed ("pay as you go") directly to the local loop operator (free access accounts or billed for use)


  • Subscriptions (units)

    Q2 2004

    Q3 2004

    Q4 2004

    Q1 2005

    Q2 2005

    Change
    Q2 05/Q2 04

    Dial-up Internet subscriptions

    6 230 045

    5 810 631

    5 406 522

    5 015 358*

    4 397 836

    -29.4%

    of which flat-rate packages

    3 680 221

    3 335 119

    3 015 976

    2 737 403*

    2 545 290

    -30.8%

    of which free access accounts

    2 549 824

    2 475 512

    2 390 546

    2 277 955

    1 852 546

    -27.3%

    * adjusted figures.

    2.2.2High-speed Internet

    High-speed Internet revenues reached €586 million in the second quarter 2005 (of which 91% for ADSL access revenues, 5% for cable access and 4% for other types of access). The total number of high-speed subscriptions reached 7.9 million, for 60.7% growth over the second quarter 2005. More than 500 000 new ADSL subscriptions were recorded by operators during the second quarter 2005. This increase reflects customers' switch from dial-up to high speed, encouraged by the decline in the prices of high-speed packages offered by ISPs and by the improvement in the geographic coverage of high speed.

    Internet subscriptions via cable are also up (+22.2%), topping the half-million subscription mark.

    Revenue (in millions of euros)

    Q2 2004

    Q3 2004

    Q4 2004

    Q1 2005

    Q2 2005

    Change
    Q2 05/Q2 04

    High-speed Internet revenue

    409

    424

    472*

    536

    586

    +43.3%

    of which revenue from xDSL

    361

    378

    426*

    483

    535

    +48.2%

    of which revenue from cable

    30

    30

    30

    30

    29

    -2.4%

    of which revenue from other connections

    17

    17

    16

    23

    22

    +27.7%

    * adjusted figures.

    Subscriptions (units)

    Q2 2004

    Q3 2004

    Q4 2004

    Q1 2005

    Q2 2005

    Change
    Q2 05/Q2 04

    High-speed Internet subscriptions

    4 911 413

    5 497 695

    6 562 541*

    7 329 977*

    7 893 286

    +60.7%

    ADSL

    4 482 948

    5 061 779

    6 105 267*

    6 831 155*

    7 368 902

    +64.4%

    Cable

    424 978

    432 500

    454 035

    494 567

    519 400

    +22.2%

    Other technology

    3 487

    3 416

    3 239

    4 256*

    4 984

    +42.9%

    Source: ART Internet Observatory data for 2004, Market Observatory data beginning the first quarter 2005.
    Cable: Source: AFORM at 2nd quarter 2004. AFORM: Association Française des Opérateurs de Réseaux Multiservices (www.aform.org).

    Notes:
    - High-speed Internet access broken down by access technology: to correctly interpret the figures, one must take into account the differences in geographical coverage for the telephone network and cable networks. Aform reports 6.5 million available cable connections suited to Internet compared to the technical potential for xDSL of over 33 million lines.
    - WiFi subscriptions are covered beginning the first quarter 2005. They correspond to accesses from private locations. They do not cover access from public places for mobile use (train stations, airports, hotels, universities, etc.) or WiFi connections purchased in addition to other types of access (DSL or others).

    2.3 Mobile telephony

    Since early 2005, revenues which had previously been included with mobile telephony revenues were reassigned to the "data transport on mobile networks" and "advanced mobile services" lines because of better consideration of these services in the answers provided by mobile operators to the Observatory.

    As for data transport, only revenues from non-interpersonal services (such as mobile Internet access and multimedia services) are affected by these reassignments. On a constant basis, revenues from data transport are up 30%.

    Revenue (in millions of euros)

    Q2 2004

    Q3 2004

    Q4 2004

    Q1 2005

    Q2 2005

    Change
    Q2 05/Q2 04

    Mobile telephony

    3 304

    3 449

    3 430

    3 350*

    3 475

    +5.2%

    of which outgoing international calls

    131

    147

    144

    145*

    142

    +8.2%

    Data transport on mobile networks

    312

    337

    350

    479*

    456

    n.s.

    of which interpersonal messaging

    262

    281

    285

    341*

    326

    +24.4%

    Total mobile telephony and data transport

    3 616

    3 786

    3 780

    3 829*

    3 932

    +8.7%

    * adjusted figures.

    Volumes (in millions of minutes)

    Q2 2004

    Q3 2004

    Q4 2004

    Q1 2005

    Q2 2005

    Change
    Q2 05/Q2 04

    Calls to national fixed lines

    5 502

    5 356

    5 581

    5 261*

    5 130

    -6.8%

    Calls to mobile phones on the same network

    7 743

    8 024

    8 575

    9 393*

    9 955

    +28.6%

    Calls to other networks

    4 553

    4 578

    4 850

    4 551*

    4 801

    +5.4%

    Outgoing internationals calls

    238

    253

    252

    258*

    266

    +11.8%

    Roaming out 6

    222

    340

    223

    221

    262

    +18.0%

    Total mobile telephony

    18 258

    18 552

    19 481

    19 684

    20 414

    +11.8%

    * adjusted figures.

    ______________
    6 Roaming out corresponds to calls made in other countries by customers of French mobile operators.

    Note: The scope covers network operators, but also mobile virtual operators (MVNOs)

    During the second quarter 2005, 3.1 billion interpersonal SMS were sent. The growth rate over one year reached 27%. The number of mobile telephony subscriptions reached 45.4 million at the end of the second quarter 2005. Flat-rate package represented 62.9% of total mobile subscriptions. The annual growth rate (+7.5%) did not slow and has remained at around the same level since mid 2003.

    Volume of interpersonal messaging (millions of units)

    Q2 2004

    Q3 2004

    Q4 2004

    Q1 2005

    Q2 2005

    Change
    Q2 05/Q2 04

    Number of interpersonal SMS sent during the quarter

    2 455

    2 746

    3 045

    3 217

    3 118

    +27.0%


    Number of mobile customers (units)

    Q2 2004

    Q3 2004

    Q4 2004

    Q1 2005

    Q2 2005

    Change
    Q2 05/Q2 04

    Mobile telephony

    42 243 852

    42 867 776

    44 543 959

    44 931 565*

    45 394 866

    +7.5%

    of which contract subscribers

    25 583 575

    26 333 274

    27 419 540

    27 870 636*

    28 551 611

    +11.6%

    of which pre-paid cards

    16 660 277

    16 534 502

    17 124 419

    17 060 929

    16 843 255

    +1.1%

    of which active pre-paid cards 7

    16 027 076

    15 923 340

    16 411 204

    16 340 187*

    16 088 122

    +0.4%

    ______________
    7 A prepaid card is considered active if the customer has made or received at least one call during the past three months. Only telephone calls are considered, whether free or payable. SMS are not included in the calculation.

    Multimedia users and portability (units)

    Q2 2004

    Q3 2004

    Q4 2004

    Q1 2005

    Q2 2005

    Change
    Q2 05/Q2 04

    Active mobile multimedia users

    7 548 559

    8 062 476

    10 306 837

    10 441 595

    10 787 645

    +42.9%

    Number of mobile numbers ported during the quarter

    51 779

    47 450

    59 864

    71 558*

    66 319

    +28.1%

    Notes:

    - The number of active multimedia users is defined as the number of customers (subscribers or prepaid) who have used at least one multimedia service such as Wap; i-Mode; MMS; e-mail (SMS are not covered by this definition) within the past month, regardless of the technology used (CSD; GPRS, UMTS, etc.). Perimeter: Metropolitan France and DOM.

    - The number of ported numbers is defined as the number of telephone numbers effectively ported (numbers activated with the receiving operator) during the past quarter. Scope: Metropolitan France and DOM.

    2.4 Other market components

    2.4.1 Advanced services

    Advanced services revenue (**) (in millions of euros)

    Q2 2004

    Q3 2004

    Q4 2004

    Q1 2005

    Q2 2005

    Change
    Q2 05/Q2 04

    Advanced services

    422*

    427

    445*

    545*

    509

    +20.7%

    Fixed operators (voice services)

    301

    298

    305

    290*

    262

    -13.1%

    Mobile operators (voice and data services)

    121*

    129

    141

    255*

    248

    n.s.

    * adjusted figures.
    ** These are all amounts billed by operators to customers calling "special numbers", including amounts paid by operators to service providers.

    Advanced voice service volumes (in millions of minutes)

    Q2 2004

    Q3 2004

    Q4 2004

    Q1 2005

    Q2 2005

    Change
    Q2 05/Q2 04

    Advanced services

    2 334

    2 483

    2 638

    2 311*

    2 291

    -1.8%

    Fixed operators (voice services)

    2 102

    2 217

    2 379

    1 967*

    1 952

    -7.2%

    Mobile operators (voice and data services)

    232

    266

    259

    345

    339

    n.s.

    * adjusted figures.

    For advanced services, whether advanced voice services ("special numbers") or data services (SMS+ and MMS+ for weather, horoscopes, game shows, ring tones, etc.), mobile operators have improved the exactitude of their answers to the Observatory since early 2005. Because of these adjustments, we have reassigned some revenues to these items, and extended the perimeter of the advanced voice services considered (revenues and volumes).

    Beginning the first quarter 2005, this extension of the perimeter in terms of traffic represents some 80 million minutes. In terms of revenues, the adjustment is estimated at €105 million.

    In addition to the increase related to differences in measurement, the volume of traffic of mobile operators’ customers to advanced services has grown. The same is true of their corresponding revenues.

    2.4.2 Leased lines and data transport (fixed operators)

    Revenue (in millions of euros)

    Q2 2004

    Q3 2004

    Q4 2004

    Q1 2005

    Q2 2005

    Change
    Q2 05/Q2 04

    Leased lines

    542

    554

    566

    565

    570

    +5.1%

    Data transport
    (operators licensed under the former regulatory framework)

    130

    147

    155

    Data transport
    (operators registered under the new regulatory framework)

    496*

    531

    * adjusted figures.

    Note: Revenue from leased lines may be counted twice in that operator-to-operator sales are included.
    These sales may represent up to 35% of the total revenue from leased lines.

    Data transport revenue since 2000 (in millions of euros)

    2000

    2001

    2002

    2003

    2004

    ARCEP
    Partial perimeter

    530

    676

    506

    633

    563

    INSEE
    Complete perimeter

    1 551

    1 853

    2 191

    2 284

    N/A

    Under the former regulatory framework, companies not using their own infrastructure to offer data transport were not licensed. As a result, the Observatory’s data are incomplete until 2004. The additional survey conducted by INSEE estimates the sales of this market at €2.3 billion for 2003, with licensed operators contributing just over one-quarter of sales.

    Note: More than half of frame relay revenue and a significant share of ATM services reported by operators actually concern RPV IP services from the customer’s side, based on combinations of transport technologies (leased lines, frame relay, DSL, ATM, Ethernet).

    2.4.3 Other services linked to telephony service

    Directory assistance services

    Revenue (in millions of euros)

    Q2 2004

    Q3 2004

    Q4 2004

    Q1 2005

    Q2 2005

    Change
    Q2 05/Q2 04

    Directory services and advertising

    70*

    73*

    73

    69

    76

    +8.3%

    Fixed operators

    50*

    52*

    52

    48

    54

    +8.9%

    Mobile operators

    20

    21

    21

    20

    22

    +6.9%

    * adjusted figures.

    Terminals and equipment

    Revenue (in millions of euros)

    Q2 2004

    Q3 2004

    Q4 2004

    Q1 2005

    Q2 2005

    Change
    Q2 05/Q2 04

    Terminals and equipment

    472

    629

    625

    512

    483

    +2.2%

    Fixed operators

    164

    176

    170

    221

    164

    -0.2%

    Mobile operators

    308

    453

    455

    292

    318

    +3.4%

    Note: As in previous issues, the revenue from packs and terminals includes commissions to distributors.

    2.4.4 Hosting and call centre management services

    The increase in revenues from hosting and call centre management services beginning the first quarter 2005 results from the extension of the perimeter of the Observatory to new operators.

    Revenue (in millions of euros)

    Q2 2004

    Q3 2004

    Q4 2004

    Q1 2005

    Q2 2005

    Change
    Q2 05/Q2 04

    Hosting and call centre management

    7

    7

    7

    25

    24

    n.s.

    2.5 Indicators per customer

    Average monthly revenue per customer in euros (VAT excluded)

    Q2 2004

    Q3 2004

    Q4 2004

    Q1 2005

    Q2 2005

    Change
    Q2 05/Q2 04

    Fixed telephony user (1)

    30.1

    29.3

    29.6

    28.3*

    27.8

    -7.7%

    Mobile telephony user (1’)

    28.6

    29.7

    28.8

    28.5*

    29.0

    +1.3%

    Dial-up Internet user (2)

    10.6

    9.8

    10.0

    9.4

    9.3

    -11.6%

    High-speed Internet user (2’)

    29.3*

    27.2

    26.1*

    25.7

    25.7

    -12.3%

    * adjusted figures.

    Average monthly traffic per customer (3) in hours

    Q2 2004

    Q3 2004

    Q4 2004

    Q1 2005

    Q2 2005

    Change
    Q2 05/Q2 04

    From fixed telephony network

    4 hrs 07 sec

    3 hrs 49 sec

    4 hrs 15 sec

    4 hrs 19 sec

    4 hrs 02 sec

    -2.1%

    From mobile telephony networks

    2 hrs 25 sec

    2 hrs 25 sec

    2 hrs 29 sec

    2 hrs 27 sec

    2 hrs 31 sec

    +4.2%

    From dial-up Internet

    11 hrs 59 sec

    11 hrs 15 sec

    11 hrs 58 sec

    11 hrs 38 sec

    11 hrs 47 sec

    -1.7%


    in units

    Q2 2004

    Q3 2004

    Q4 2004

    Q1 2005

    Q2 2005

    Change
    Q2 05/Q2 04

    Number of SMS sent per user during the quarter (4)

    19.4

    21.5

    23.2

    24.0

    23.0

    +18.4%

    Average number of users of quarter N: [(total number of customers at the end of the quarter N + total number of users at the end of the quarter N-1) / 2]
    (1) This indicator is calculated by dividing the sales of fixed line calls and of the subscription for the quarter N by an estimate of the average number of users of quarter N, divided by the number of months.
    (1’)This indicator is calculated by dividing mobile telephony sales of quarter N by an estimate of the average number of users of quarter N, divided by the number of months. This indicator, which does not include interconnection revenues, or those from advanced services, is different from the traditional average revenue per user indicator (ARPU).
    (2) This indicator is calculated by dividing the sales of dial-up Internet access of quarter N by an estimate of the average number of users of quarter N, divided by the number of months.
    (2’) This indicator is calculated by dividing the sales of high-speed Internet access of quarter N by an estimate of the average number of users of quarter N, divided by the number of months.
    (3) This indicator is calculated by dividing the volume of traffic of quarter N by an estimate of the average number of users of quarter N, divided by the number of months
    (4) This indicator is calculated by dividing the number of SMS of quarter N by an estimate of the number of customers of quarter N, divided by the number of months.

    3 Quarterly changes in traffic volumes

    The Market Observatory’s chronological quarterly series often show seasonal variations in traffic volumes which make them difficult to interpret.
    The seasonally adjusted series show trends and variations, quarter by quarter.

    The volume of calls originating on fixed lines: growth is confirmed

    The volumes of calls originating on fixed phones include calls originating on fixed telephones, public pay phones and customers using prepaid cards.
    These volumes show strong seasonal variations during the third quarter of every year, with a decline in calls made during the summer months.
    The seasonally adjusted series shows that the strong decline in volumes in 2001 and 2002 eased off in early 2003.
    Thus, the volumes of traffic originating on fixed phones, which declined on average by 1.6% each quarter in 2001 and 2002, fell by just 0.4% per quarter in 2003 and 2004. The first two quarters of 2005 are marked by stronger volumes of traffic originating on fixed lines.

     

    Q1 2001

    Q2 2001

    Q3 2001

    Q4 2001

    Q1 2002

    Q2 2002

    Q3 2002

    Q4 2002

    Q1 2003

    Raw data

    31 923

    29 670

    27 055

    29 975

    29 553

    28 075

    25 858

    28 050

    28 183

    Seasonally adjusted values

    30 338

    29 692

    29 293

    29 127

    28 120

    28 087

    27 991

    27 278

    26 826

    Quarterly variation, adjusted

     

    -2.1%

    -1.3%

    -0.6%

    -3.5%

    -0.1%

    -0.3%

    -2.5%

    -1.7%


     

    Q2 2003

    Q3 2003

    Q4 2003

    Q1 2004

    Q2 2004

    Q3 2004

    Q4 2004

    Q1 2005

    Q2 2005

    Raw data

    26 972

    24 942

    27 760

    27 909

    25 828

    24 008

    26 547

    27 573

    26 323

    Seasonally adjusted values

    26 965

    26 987

    26 986

    26 573

    25 844

    25 961

    25 802

    26 223

    26 324

    Quarterly variation, adjusted

    0.5%

    0.1%

    0.0%

    -1.5%

    -2.7%

    0.5%

    -0.6%

    1.6%

    0.4%

    Volumes of dial-up Internet calls: strong decline

    Dial-up Internet volumes decline sharply during the third quarter of every year because of summer vacation. The seasonally adjusted series show a strong increase in volumes until the second quarter 2001, then slower growth until the third quarter 2003. After this point, the volumes of dial-up Internet decline.

    This decline can be explained in its entirety by the rapid substitution with high-speed subscriptions, whose traffic is not measured in minutes. The decline seems to grow at the very end of the period: traffic volumes decreased on average by 7.6% during 2004. In late 2004 and early 2005, the decline accelerates (-11.7% then -12.3%).

    It appears to slow in the second quarter 2005, with a 3.1% decline.

     

    Q1 2000

    Q2 2000

    Q3 2000

    Q4 2000

    Q1 2001

    Q2 2001

    Q3 2001

    Q4 2001

    Q1 2002

    Q2 2002

    Q3 2002

    Raw data

    6 004

    6 906

    7 317

    10 639

    12 585

    13 584

    13 049

    15 968

    17 021

    15 825

    14 985

    Seasonally adjusted values

    5 078

    6 697

    8 655

    10 403

    11 776

    13 361

    14 499

    15 746

    16 381

    15 959

    16 343

    Quarterly variation, adjusted

     

    31.9%

    29.2%

    20.2%

    13.2%

    13.5%

    8.5%

    8.6%

    4.0%

    -2.6%

    2.4%


     

    Q4 2002

    Q1 2003

    Q2 2003

    Q3 2003

    Q4 2003

    Q1 2004

    Q2 2004

    Q3 2004

    Q4 2004

    Q1 2005

    Q2 2005

    Raw data

    18 279

    18 971

    18 124

    16 664

    17 313

    16 289

    13 911

    12 192

    12 081

    10 905

    9 983

    Seasonally adjusted values

    17 727

    18 402

    18 471

    18 197

    17 058

    15 847

    14 367

    13 572

    11 980

    10 502

    10 176

    Quarterly variation, adjusted

    8.5%

    3.8%

    0.4%

    -1.5%

    -6.3%

    -7.1%

    -9.3%

    -5.5%

    -11.7%

    -12.3%

    -3.1%

    Volumes of calls originating on mobile p hones: no slowing of growth

    Mobile telephony volumes slow slightly during the third quarter of every year. The seasonally adjusted series confirm strong, sustained growth throughout the period: in 2004, it reached 3.5% per quarter on average.

    At the first quarter 2005, the growth in traffic volume continued: after a somewhat weak first quarter (+0.6%), it regained strength in the second quarter (+4.6%).

     

    Q1 2000

    Q2 2000

    Q3 2000

    Q4 2000

    Q1 2001

    Q2 2001

    Q3 2001

    Q4 2001

    Q1 2002

    Q2 2002

    Q3 2002

    Raw data

    8 302

    8 606

    9 057

    9 812

    10 572

    10 822

    10 992

    11 887

    12 250

    12 616

    12 923

    Seasonally adjusted values

    8 114

    8 587

    9 368

    9 707

    10 384

    10 803

    11 304

    11 783

    12 062

    12 597

    13 234

    Quarterly variation, adjusted

     

    5.8%

    9.1%

    3.6%

    7.0%

    4.0%

    4.6%

    4.2%

    2.4%

    4.4%

    5.1%


     

    Q4 2002

    Q1 2003

    Q2 2003

    Q3 2003

    Q4 2003

    Q1 2004

    Q2 2004

    Q3 2004

    Q4 2004

    Q1 2005

    Q2 2005

    Raw data

    13 991

    14 726

    15 500

    15 597

    16 998

    18 009

    18 258

    18 552

    19 482

    19 682

    20 414

    Seasonally adjusted values

    13 886

    14 538

    15 481

    15 908

    16 894

    17 821

    18 239

    18 863

    19 378

    19 494

    20 395

    Quarterly variation, adjusted

    4.9%

    4.7%

    6.5%

    2.8%

    6.2%

    5.5%

    2.3%

    3.4%

    2.7%

    0.6%

    4.6%

    SMS volumes: growth facilitated by the rising number of mobile telephony customers and intensified SMS use

    Because of the huge numbers of SMS sent in early January, SMS volumes increase quite strongly during the first quarter of every year. The seasonally adjusted series shows regular growth from the first quarter 2001 to the fourth quarter 2004.

    SMS traffic rose 6% on average, in 2004. This increase is due to both the rise in the number of mobile telephony customers (+1.7%) and to average SMS consumption per customer (+4.1%).

    The seasonally adjusted volumes of SMS exchanged increased 3% in the second quarter 2005, confirming the trend observed early in the year.

     

    Q1 2001

    Q2 2001

    Q3 2001

    Q4 2001

    Q1 2002

    Q2 2002

    Q3 2002

    Q4 2002

    Q1 2003

    Raw data

    669

    693

    812

    1 060

    1 357

    1 371

    1 487

    1 662

    1 970

    Seasonally adjusted values

    562

    766

    887

    1 019

    1 250

    1 444

    1 562

    1 621

    1 863

    Quarterly variation, adjusted

     

    36.4%

    15.7%

    14.9%

    22.7%

    15.6%

    8.1%

    3.8%

    14.9%


     

    Q2 2003

    Q3 2003

    Q4 2003

    Q1 2004

    Q2 2004

    Q3 2004

    Q4 2004

    Q1 2005

    Q2 2005

    Raw data

    1 956

    2 055

    2 429

    2 572

    2 455

    2 746

    3 045

    3 217

    3 118

    Seasonally adjusted values

    2 029

    2 130

    2 388

    2 465

    2 528

    2 821

    3 004

    3 110

    3 202

    Quarterly variation, adjusted

    8.9%

    5.0%

    12.1%

    3.2%

    2.6%

    11.6%

    6.5%

    3.5%

    3.0%