Observatory / Services Market Observatory

Le marché des services de télécommunications en France au 3ème trimestre 2005

The electronic communications services market in France 3rd quarter 2005 / February 2006

Last update 13th February 2006

To download the survey (pdf)

Content

Introduction
1 The communications market as a whole
1.2 The intermediate market between operators (interconnection services / wholesale markets)
1.2.1 The total market
1.2.2 Incoming international traffic ⁵
1.2.3 Mobile operator roaming-in ⁶
2 Market segments
2.1 Fixed telephony
2.1.1 Access, subscriptions and fixed lines
2.1.2 Calls from fixed lines (excluding public payphones and cards and excluding Internet)
2.1.3 Telephone cards and public payphones
2.1.4 Quarterly change in telephone traffic data on the fixed network
2.2 Internet
2.2.1 Dial-up Internet
2.2.2 High-speed Internet
2.3 Mobile telephony
2.3.1 Subscriptions
2.3.2 Revenue and volumes
2.4 Other market components
2.4.1 Advanced services
2.4.2 Leased lines and data transport (fixed operators)
2.4.3 Other services linked to telephony service
2.4.4 Hosting and call centre management services
2.5 Indicators per customer

Introduction

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

The French electronic communications market reached €10.2 billion in third quarter 2005. The three main segments (mobile telephony, fixed telephony and Internet) represented €7.9 billion, or close to 80% of total revenues. In one year, revenues for all three segments grew 5.1%.

Fixed telephony and Internet

The number of subscriptions to telephone service continued to grow in the third quarter of 2005 (35.7 million subscriptions). This growth was based on the strong increase in the number of subscriptions to telephony on IP services (2.4 million at the end of the quarter), helped by the development of unbundling offers. During the third quarter, 200 000 additional lines were unbundled. The increase in total unbundling was 100 000 lines over the same period. In all, 2.5 million telephone lines had been unbundled at the end of the third quarter, of which 372 000 lines were fully unbundled.

The number of lines using indirect connections also continued to increase at a strong rate (+9.9% in one year). In particular, the growth of pre-selection remains very strong (+18.1% lines in one year). The number of lines using call-by-call selection, on the other hand, declined (-6.6%), representing just 28% of lines using indirect connections.

The total number of Internet subscriptions reached 12.6 million at the end of the third quarter of 2005. Close to 8.5 million subscriptions were for high-speed access (ADSL, cable, WLL, etc.), for growth of just over 50% in one year. ADSL was the main means of access, although cable access also continued to develop (+22.5% in one year). Revenues from high-speed access (€611 million) were up 44.1% in one year and represented close to 75% of total Internet revenues (€817 million). The number of dial-up Internet subscriptions and revenues declined sharply.

Mobile telephony

The number of subscribers to mobile telephony (flat-rates and prepaid packages) topped 46 million in the third quarter. Growth in one year reached 7.6%, similar to that observed over the previous three years. Of these subscribers, 11.4 million were regular users of mobile multimedia services (MMS, services Wap, e-mail, etc.), representing 25% of subscribers, whereas the proportion was just 19% a year earlier.

Mobile telephony revenues reached €3.7 billion for the quarter, increasing 7.6% in one year, at the same pace as telephony traffic volumes. However, growth in the volume of telephone traffic from mobile phones slowed in early 2005. This volume did not increase in the third quarter in seasonally adjusted figures.

Advanced services

The services consumed by customers of mobile operators generated revenue of €272 million in the third quarter of 2005, or just over 7% of additional revenues with respect to telephony revenue. Of advanced services, those including data, i.e. for example "gallery" kiosk services, ring tones, news services and voting via SMS during television programmes generated €74 million invoiced to customers in the third quarter 2005. Part of this amount was repaid by operators to service providers.

Advanced services consumed by customers of fixed operators, i.e. voice services ("special numbers") and telematic services (Minitel), generated €250 million in the third quarter 2005.

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 were caused by rounding.

1 The communications market as a whole

1.1 The end customer market

Growth in telephony and Internet revenues was 5.1% in the third quarter 2005 with respect to third quarter 2004. The increases in mobile telephony (+9.8%) and Internet revenues (+25.0%) more than offset the decline in fixed telephony revenues (-4.8%). In constant terms, i.e. excluding the effect due to the expansion of the data transport activities, growth of the entire electronic communications market was approx. +3%.

Revenue (millions of euros)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Fixed telephony ¹	3 105	3 123	3 028	3 049	2 956	-4.8%
Internet	653	709	753	795	817	+25.0%
Mobile telephony ²	3 787*	3 783*	3 905*	4 013*	4 159	+9.8%
All telephony and Internet	7 546*	7 615*	7 685*	7 857*	7 932	+5.1%
Advanced services	466*	489*	550*	514*	522	+12.0%
Leased lines	554	566	565	566*	529	-4.5%
Data transport ³	147	155	496	531	588	N/S
Directory services, directories and advertising	73	73	69	76	73	-0.7%
Hosting and call centre management	7	7	25	24	18	N/S
Terminals and equipment ⁴	629	625	512	483	515	-18.1%
Entire market	9 422*	9 530*	9 903*	10 051	10 177	N/S

* adjusted figures

The perimeter of the Observatory was expanded in early 2005 to include all Internet access providers and data transport operators. For 2004, only Internet revenues under this new perimeter are shown. ARCEP cannot provide historic data for data transport revenues for 2004.

______________
1 This indicator covers the revenues from access fees and subscriptions, from 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 was included in the overall total for mobile
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 (millions of minutes)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Fixed telephony	24 009	26 547	27 573	26 334*	23 690	-1.3%
Internet (dial-up)**	12 192	12 081	10 905	9 983	8 621	-29.3%
Mobile telephony	18 552	19 481	19 625*	20 358*	19 962	+7.6%
Total telephone service and Internet	54 753	58 109	58 103*	56 675*	52 273	-4.5%
*Of which telephone service (fixed and mobile)*	42 561	46 028	47 198*	46 691*	43 652	+2.6%

* 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 The intermediate market between operators (interconnection services / wholesale markets)

1.2.1 The total market

The end of the so-called "bill & keep" system in early 2005 caused a sharp increase in interconnection service revenues for mobile operators, since operators began billing each other for interconnection services at that time.

There is a break in the first quarter 2005 in the series of revenues for wholesale Internet services because of a change in the questionnaire (inclusion of options 3 and 5, traffic delivery at the regional and national levels).

Revenue (millions of euros)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Interconnection services*	1 552	1 470	2 147*	2 243*	2 339	N/S
of which fixed operators*	725	744	771	813	846	+16.7%
of which Internet	62	66	199	192	202	N/S
of which dial-up Internet	33	32	24	21	21	-35.8%
of which mobile operators	765	660	1 177*	1 237*	1 291	N/S

Volumes (millions of minutes)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Interconnection services*	36 574	39 565	39 285*	39 685*	37 664	+3.0%
of which fixed operators**	21 429	23 701	24 760*	25 472*	24 324	+13.5%
of which dial-up Internet	7 557	8 250	7 196*	6 430	5 538	-26.7%
of which mobile operators	7 588	7 615	7 329*	7 783*	7 802	+2.8%

* adjusted figures.

Notes:
- Interconnection revenue and volumes were 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 concentrations 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 ⁵

Revenue (millions of euros)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Incoming international interconnection services	251	238	234*	243*	292	+16.6%
of which fixed operators	207	195	200*	204	248	+19.4%
of which mobile operators	43	43	34	39	45	+3.4%

Volumes (millions of minutes)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Incoming international interconnection services	1 751	1 677	1 880*	2 116*	2 197	+25.5%
of which fixed operators	1 466	1 415	1 617*	1 815*	1 847	+26.0%
of which mobile operators	285	262	262*	301*	350	+22.8%

* adjusted figures.

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

1.2.3 Mobile operator roaming-in ⁶

	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Revenue (millions of euros)	289	177	194	211	269	-6.8%
Volume (millions of minutes)	422	266	307	347	461	+9.3%

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

______________
6 This market segment was a subset of the total market (cf. 1.2.1)

2 Market segments

2.1 Fixed telephony

2.1.1 Access, subscriptions and fixed lines

Access revenue (millions of euros)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Access fees, subscriptions and additional services	1 366	1 374	1 354	1 430	1 416	+3.7%

Until 2004, the Observatory monitored an indicator called "number of fixed lines", which was actually the number of subscriptions on the switched telecommunications network (STN, dial-up and cable).

Beginning in 2005, the indicator is now the "number of fixed lines supporting telephone service", since more than one telephone subscription can exist on the same line (a "classic" STN subscription and a voice-on-IP subscription).

The number of telephone service subscriptions increased because of the rapid growth of subscriptions to voice on IP services and telephone services on cable (+63.7% in one year), which reached 2.4 million subscriptions and 105 000 subscriptions, respectively, at the end of the period.

Number of fixed lines (units)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Number of subscriptions to telephone service (voice)			35 101 687	35 331 870*	35 654 736
of which on analogue or digital lines	33 695 794	33 903 157	33 501 640	33 313 850*	33 150 028	-1.6%
of which on IP DSL			1 526 918	1 938 167	2 399 132
of which on WLL			291	290	299
of which on cable	64 296	68 971	72 838	79 563	105 277	+63.7%

* adjusted figures.

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

On the terminology used:

The indicators for telephone service on IP in this issue cover voice on broadband 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 broadband" 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 Observatory 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 PC-to-PC voice on Internet. They are not currently covered by the scope of the survey.

On the revenue taken into account:

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).

The number of indirect connections continued to increase at a strong rate (+9.9% in one year), because of the continuing dynamic development of pre-selection. In one year, one million additional lines were switched to automatic carrier pre-selection.

Number of indirect connections (units)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Number of indirect connections	7 896 331	7 930 294	8 351 140	8 738 136*	8 678 483	+9.9%
of which call-by-call selection	2 629 584	2 554 188	2 477 856	2 576 566*	2 456 587	-6.6%
of which pre-selection	5 266 747	5 376 106	5 873 284	6 161 570	6 221 896	+18.1%

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

Unbundling (units)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Number of unbundled lines	1 050 293	1 535 650	2 044 851	2 320 524	2 529 582	+140.8%
of which partially unbundled lines	996 777	1 442 781	1 885 235	2 059 440	2 157 573	+116.5%
of which fully unbundled lines	53 516	92 869	159 616	261 084	372 009	+595.1%

At the end of the third quarter 2005, there were 2.5 million unbundled lines, with 1.5 million new lines in one year. For the second quarter in a row, full unbundling rose by 100 000 lines, contributing more than half of the growth in the number of unbundled lines in the quarter in absolute value. These figures also show a slowdown in the overall growth of unbundling.

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

The volume of calls originating on fixed lines declined by 1.3% in one year. Calls originating on VoIP services represented 8% of total call volumes on fixed lines in the third quarter 2005, compared with 7% during the previous quarter.

Revenue (millions of euros)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
National calls excluding fixed to mobile	849	887	879	816	765	-9.9%
Of which local calls	546	561
Of which long-distance calls	303	326
International calls	168	161	164	160	156	-7.2%
Calls to mobiles	587	584	532	528	499	-15.1%
All calls from fixed lines	1 604	1 632	1 575	1 504	1 420	-11.5%
Of which calls originating on VoIP services	N/A	N/A	16	22	28	-

Volumes (millions of minutes)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
National calls	19 359	21 958	22 948	21 566*	18 997	-1.9%
Of which local calls	12 995	14 754
Of which long-distance calls	6 364	7 204
International calls	1 010	1 029	1 021	1 011*	978	-3.2%
Calls to mobiles	2 883	2 893	2 907	3 036*	2 973	+3.1%
All calls from fixed lines	23 252	25 879	26 876	25 613*	22 949	-1.3%
Of which calls originating on VoIP services	N/A	N/A	1 527	1 802	1 901	-

* adjusted figures.

Notes:
- Since the first quarter 2005, the Observatory has been distinguishing between calls originating on telephony on IP services and other voice calls. However, while the volume of VoIP calls covers all of this traffic on the end market, the revenue covers only VoIP traffic which is effectively billed (for example in addition to a multi-play flat-rate package).
- 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 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.

2.1.3 Telephone cards and public payphones

Subscriber cards and prepaid cards	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Revenue (millions of euros)	60	54	52	57	60	-0.5%
Volumes (millions of minutes)	460	437	495	499	514	+11.7%

Public telephony	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Number of public payphones at end of quarter (units)	191 794	189 339	187 695*	185 343*	183 265	-4.4%
Revenue (millions of euros)	75	63	46	59	61	-18.2%
Volumes (millions of minutes)	297	230	203	221	227	-23.5%

* adjusted figures.

2.1.4 Quarterly change in telephone traffic data on the fixed network

The volumes of calls originating on fixed phones include calls originating on fixed phones, public telephones and pre-paid cards.

The adjusted series shows traffic volume originating on fixed phones has remained stable since early 2004.

The slight recovery in traffic observed during the first two quarters of 2005 was not confirmed during the third quarter (-2.7% following +1.6% and +0.4%).

(The series of values are available in the "séries chronologiques" file available for consultation on ARCEP’s web site)

2.2 Internet

At the end of the third quarter 2005, the number of Internet subscriptions reached 12.5 million, for an 11.2% increase in one year. The number of high-speed accesses (ADSL, cable, WLL, etc.) continued to grow rapidly: +54.2% in one year, representing 8.5 million subscriptions, or two-thirds of all Internet subscriptions. At the same time, the number of dial-up accesses shrunk by 29.5% over the same period.

Internet subscriptions (units)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Total Internet subscriptions	11 308 326	11 969 063	12 345 335	12 290 964*	12 573 613	+11.2%
Dial-up Internet subscriptions	4 587 833	4 057 447	5 015 358	4 397 836	4 094 619	-29.5%
High speed subscriptions (cable, xDSL, WLL, etc.)	5 497 695	6 562 541	7 329 977	7 893 128*	8 478 994	+54.2%

* adjusted figures.

Revenue (registered operators in the new legal framework) (millions of euros)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Total Internet revenue	653	709	753	795	817	+25.0%
of which dial-up	177	168	147	132	119	-32.8%
of which high-speed	424	472	536	586	611	+44.1%
of which other revenue	52	69	69	77	87	+66.5%

Note: The revenues of registered operators (all ISPs) correspond to revenues for services billed to the end customer. The "other Internet revenue" line corresponds to IAPs’ additional Internet access revenue from such things as site hosting and on-line advertising or income from terminal sales and rentals.

Total Internet revenues (revenues from subscriptions and related services proposed by IAPs) represented €817 million in the third quarter 2005, for a 25.0% increase with respect to the third quarter of 2004. Growth in revenues from high-speed access and related revenues (respectively +44.1% and 66.5% in one year) more than offset the decline in dial-up revenues observed over the same period (-32.8%).

2.2.1 Dial-up Internet

The number of subscriptions to dial-up Internet access fell by 29.5% with respect to the third quarter 2004, with 4.1 million subscriptions at the end of the third quarter 2005, compared with 5.8 million a year earlier. The revenues and traffic volumes generated by dial-up access also fell, declining 32.8% and 29.3%, respectively.

Subscriptions (units)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Dial-up Internet subscriptions	5 810 631	5 406 522	5 015 358	4 397 836	4 094 619	-29.5%
of which flat-rate packages	3 335 119	3 015 976	2 737 403	2 545 290	2 379 313	-28.7%
of which free access accounts	2 475 512	2 390 546	2 277 955	1 852 546	1 715 306	-30.7%

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).

Revenue (registered operators in the new legal framework) (millions of euros)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Revenue of dial-up Internet	177	168	147	132	119	-32.8%
of which flat-rate packages	135	124	106	99	92	-32.0%
of which free access accounts	43	45	41	33	28	-35.3%

Volumes (registered operators in the new legal framework) (millions of minutes)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Volumes of dial-up Internet	12 192	12 081	10 905	9 983	8 621	-29.3%
of which flat-rate packages	10 413	10 285	9 310	8 626	7 452	-28.4%
of which free access accounts	1 780	1 796	1 600	1 358	1 168	-34.3%

The seasonally adjusted volume series for dial-up Internet access calls show a regular decline since 2003. This slowdown can be entirely explained by the rapid substitution of dial-up Internet access by high-speed subscriptions whose traffic volume is not measured in connection time.

In the third quarter 2005, the volume of dial-up Internet calls declined by 5.8% in seasonally adjusted figures.

(The series of values are available in the "séries chronologiques" file available for consultation on ARCEP’s web site)

2.2.2 High-speed Internet

The number of subscriptions to high-speed access (8.5 million at the end of the third quarter 2005) grew by 54.2% with respect to the third quarter of 2004, with 3 million additional subscriptions. Growth in subscriptions to DSL access (more than 500 000 additional subscriptions during the third quarter) can be explained in part by customers who converted their dial-up subscription into a high-speed subscription. This conversion was encouraged by the drop in prices for high-speed packages and by improved geographic coverage of high-speed. The number of subscriptions to Internet on cable was also up (+22.5% with respect to the third quarter 2004). High-speed Internet access generated €611 million in revenues in the third quarter 2005.

Subscriptions (units)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
High-speed Internet subscriptions	5 497 695	6 562 541	7 329 977	7 893 128*	8 478 994	+54.2%
ADSL	5 061 779	6 105 267	6 831 155	7 368 744*	7 943 596	+56.9%
Cable	432 500	454 035	494 567	519 400	530 000	+22.5%
Other technology (optical fibre, WLL, etc.)	3 416	3 239	4 256	4 984	5 398	+58.0%

* adjusted figures.
Source: ART Internet Observatory data for 2004. Market Observatory data beginning the first quarter 2005.

Revenue (millions of euros)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
High-speed Internet revenue	424	472	536	586	611	+44.1%
of which revenue from xDSL	378	426	483	535	559	+48.0%
of which revenue from cable	30	30	30	29	28	-6.6%
of which revenue from other connections	17	16	23	22	24	+39.0%

Note: 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 (www.aform.org) reports 6.5 million available cable connections suited to Internet compared to the technical potential for xDSL of over 33 million lines. ).

2.3 Mobile telephony

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

2.3.1 Subscriptions

Number of mobile customers (units)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Mobile telephony	42 867 776	44 543 959	44 931 565	45 394 866	46 134 724	+7.6%
of which contract subscribers	26 333 274	27 419 540	27 870 636	28 551 611	29 385 311	+11.6%
of which pre-paid cards	16 534 502	17 124 419	17 060 929	16 843 255	16 749 413	+1.3%
of which active pre-paid cards ⁷	15 923 340	16 411 204	16 340 187	16 088 122	15 979 851	+0.4%

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

There were 46.1 million mobile telephony subscriptions at the end of the third quarter 2005. Over 3 million new subscriptions were recorded in one year.

Growth with respect to the third quarter 2004 reached 7.6%, for a growth rate matching those observed since mid 2003 on the mobile telephony market. The proportion of flat-rate packages continued to grow and now represents 63.7% of all mobile subscriptions.

Growth in the number of users of mobile multimedia services continues to be strong, with a 40% rise in one year.

The number of ported telephone numbers has stabilised at around 70 000 per quarter for the past three quarters.

Multimedia users and portability (units)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Active mobile multimedia users	8 062 476	10 306 837	10 441 595	10 787 645	11 360 669	+40.9%
Number of mobile numbers ported during the quarter	47 450	59 864	71 558	66 319	70 914	+49.4%

Notes:
- The number of active multimedia users was defined as the number of customers (subscribers or prepaid) who have used at least one multimedia service such as Wap, i-Mode, MMS or e-mail (SMS were 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 was defined as the number of telephone numbers effectively ported (numbers activated with the receiving operator) during the past quarter. Scope: Metropolitan France and DOM.

2.3.2 Revenue and volumes

Better inclusion of "data transport on mobile networks" and "advanced mobile services" in the series since 2004 has resulted in:
- the reallocation of revenues which had previously been included in telephony revenues
- the expansion of the scope of services included in the "other data transport" item

For the first time, we are publishing the breakdown of data transport revenues between interpersonal messaging services and "other data transport". "Other data transport" covers access to mobile Internet and to multimedia services.

The revenue generated by mobile telephony increased by 7.6% in one year, at a rate equal to that of traffic volume. The revenue from data transport on mobile networks increased by almost one-third in one year because of the increase in traffic of interpersonal messaging, but also because of the strong growth in revenue generated by access to mobile Internet and to multimedia services (€147 million in the third quarter 2005).

Revenue (millions of euros)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Mobile telephony	3 421*	3 403*	3 431*	3 561*	3 679	+7.6%
of which outgoing internationals calls	147	144	135*	136*	145	-1.4%
Data transport on mobile networks	367*	380*	474*	452*	480	+30.9
of which interpersonal messaging	283*	291*	341	326	333	+17.5%
Total mobile telephony and data transport	84	90	132	125	147	+76.2%
Mobile telephony	3 787*	3 783*	3 905*	4 013*	4 159	+9.8%

* adjusted figures.

Volumes (millions of minutes)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Calls to national fixed lines	5 356	5 581	5 261	5 129*	4 711	-12.0%
Calls to mobiles on the same network	8 024	8 575	9 361*	9 920*	9 947	+24.0%
Calls to other networks	4 578	4 850	4 551	4 800*	4 682	+2.3%
Outgoing internationals calls	253	252	231*	246*	265	+4.7%
Roaming out ⁸	340	223	221	262	358	+5.1%
Total mobile telephony	18 552	19 481	19 625*	20 358*	19 962	+7.6%

* adjusted figures.

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

In seasonally adjusted figures, growth in mobile telephony volumes has been strong and regular since the beginning of 2000.

Growth slowed in late 2004: after annual growth of close to 20% each year since 2000, the volume of traffic has risen by less than 8% at an annual rate during recent quarters. For the first time, the volume of traffic originating on mobile phones did not increase in the third quarter 2005 (-0.3% in seasonally adjusted figures).

(The series of values are available in the "séries chronologiques" file available for consultation on ARCEP’s web site)

In the past four quarters, the volume of interpersonal SMS sent exceeded 3 billion messages. The number of interpersonal multimedia messages (MMS) is being published for the first time the Observatory. It reached 55 million messages in the third quarter 2005: these are messages between two people which do not contain solely text, but also photographs, video or music, for example.

Volume of interpersonal messaging (in million)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Number of interpersonal messages sent during the quarter	2 765	3 086	3 248	3 136	3 138	+14.3%
of which number of interpersonal SMS	2 746	3 045	3 177*	3 079*	3 083	+12.3%
of which number of interpersonal MMS	19	41	70	57	55	+191.5%

The seasonally adjusted series of SMS volumes shows regular growth from the first quarter 2001 to the fourth quarter 2004. This growth slowed beginning the first quarter 2005.

In the third quarter 2005, the volume of SMS sent was down 1.4% with respect to that of the second quarter 2005 in seasonally adjusted figures.

(The series of values are available in the "séries chronologiques" file available for consultation on ARCEP’s web site)

2.4 Other market components

2.4.1 Advanced services

Advanced services revenue ()** (millions of euros)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Advanced services	466*	489*	550*	514*	522	N/S
Fixed operators (voice and data services)	298	305	290	262	250	-16.1%
Mobile operators (voice and data services)	168*	185*	260*	253*	272	N/S
Of which voice services	118	129	187	184	198	N/S
Of which data services (SMS+ and MMS+)***	50	56	73	69	74	+47.9%

* adjusted figures.
** These were all amounts billed by operators to customers calling "special numbers" including amounts paid by operators to service providers.
*** services such as weather forecasts, horoscopes, TV game shows, downloading of ring tones, etc.

Advanced voice service volumes (million of minutes)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Advanced services	2 483	2 638	2 315*	2 297*	2 276	-8.3%
Fixed operators	2 217	2 379	1 967	1 952	1 902	-14.2%
Mobile operators	266	259	348*	345*	374	N/S

* adjusted figures.

Advanced services including data generated €74 million in revenue billed to customers in the third quarter 2005 (+47.9% in one year), representing one quarter of mobile advance services revenues. Part of this amount was repaid by operators to service providers.

Mobile services revenues since early 2004 were adjusted upwards in this issue because of better inclusion of data service revenues.

At the start of 2005, the perimeter of voice services included by mobile operators was extended. Starting the first quarter 2005, this extension of the perimeter for traffic represented some 80 million minutes. In terms of revenues, the adjustment was estimated at €60 million.

2.4.2 Leased lines and data transport (fixed operators)

Revenue (millions of euros)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Leased lines	554	566	565	566*	529	-4.5%
Data transport *(operators registered under the former regulatory framework)*	147	155
Data transport (operators registered under the new regulatory framework)			496	531	588

* adjusted figures.
Note: Revenue from leased lines may be counted twice in that operator-to-operator sales were 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

incomplete scope

530

676

506

633

563

INSEE

entire scope

1 551

1 853

2 191

2 284

N/A

Under the former regulatory framework, firms not using their own infrastructure to offer data transport were not licensed. As a result, the Observatory’s data were 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 and Ethernet).

2.4.3 Other services linked to telephony service

Directory assistance services

Revenue (millions of euros)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Directory services and advertising	73	73	69	76	73	-0.7%
Fixed operators	52	52	48	54	51	-1.7%
Mobile operators	21	21	20	22	21	+1.8%

* adjusted figures.

Terminals and equipment

Revenue (millions of euros)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Terminals and equipment	629	625	512	483	515	-18.1%
Fixed operators	176	170	221	164	166	-5.8%
Mobile operators	453	455	292	318	349	-22.9%

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

Revenue (millions of euros)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Hosting and call centre management	7	7	25	24	18	N/S

2.5 Indicators per customer

Average monthly revenue by customer in euros (VAT excluded)	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Fixed telephony user (1)	29.3	29.6	28.3	27.8	26.6	-9.1%
Mobile telephony user (1’)	29.7	28.8	29.1*	29.6*	30.3	+2.2%
Dial-up Internet user (2)	9.8	10.0	9.4	9.3	9.4	-4.7%
High-speed Internet user (2’)	27.2	26.1*	25.7	25.7	24.9	-8.3%

* adjusted figures.

Average monthly traffic by customer (3) in hours	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
From fixed telephony network	3hrs 49min	4hrs 15min	4hrs 19min	4hrs 02min	3hrs 35min	-6.0%
From mobile telephony networks	2hrs 25min	2hrs 29min	2hrs 27min	2hrs 30min	2hrs 25min	-0.1%
From dial-up Internet	11hrs 15min	11hrs 58min	11hrs 38min	11hrs 47min	11hrs 17min	+0.3%

Units	Q3 2004	Q4 2004	Q1 2005	Q2 2005	Q3 2005	Change Q3 05/Q3 04
Number of SMS sent per user during the quarter (4)	21.5	23.2	23.7*	22.7*	22.5	+4.4%

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]

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.

Information on billing and average monthly volumes per customer indicators

The Market Observatory publishes average monthly invoice per subscription indicators for fixed telephony, mobile telephony and Internet. These are the amounts invoiced, on average by the operator to the customer for the subscription and calls (voice and data). These indicators are different from ARPU (Average Revenue Per User) which are generally operator revenues from all income related to network use.

In other words, the revenues used to calculate the average monthly invoice on mobile networks are: revenues from outgoing calls, data services (interpersonal messaging and Internet access services) and roaming out. Revenues from interconnection (incoming calls) are not taken into account.

Financial analysts and operators publish an average income per customer indicator (average recurring revenue or ARPU). This includes revenues from outgoing calls, data services, value-added services AND revenues from incoming calls (interconnection). According to operators, it may or may not include roaming income.

The Observatory also publishes average monthly outgoing traffic per customer indicators, which are representative of customers’ telephone use.

By analogy with the ARPU, some financial agencies and operators use an average traffic per customer indicator, or AUPU (Average Usage Per User); it covers all or part of incoming calls to create a volume base which is comparable with that used for the ARPU. It does not represent the average consumption per customer but is rather an indicator of the operator’s volume of activity per customer.

For fixed telephony, the revenues used are only those corresponding to subscriptions and telephone calls (including Internet access calls) excluding all other revenue, in particular from advanced services and Internet. This is a partial view of the fixed invoice because it includes only telephony values.

For Internet, the revenues taken into account are those from flat-rate subscriptions providing access to Internet and revenues from pay-as-you-go Internet connections.