Observatory / Services market observatory

Le marché des services de télécommunications en France au 2ème trimestre 2005 (publié le 15 novembre 2005)

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

Last update 15th February 2006

To download the survey (pdf)

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 1^st 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 1^st 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 4^th quarter 2004 and the 1^st quarter 2005 and +210 million minutes between the 1^st and 2^nd quarter 2005.

The volume of termination on mobile networks increased by 50 million minutes between the 1^st and 2^nd 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 4^th 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 2^nd 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%