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FT Sees Solid Early Take-Up of Orange TV via Satellite

By | October 31, 2008
      [Satellite News 10-31-08] France Telecom (Orange), which launched Orange TV via satellite in France in July, has reached 70,000 subscribers for the service, the company announced Oct. 30. The service is a complement to France Telecom’s IPTV service, which surpassed the 1.5 million mark for subscribers.
          Orange TV, a DTH service developed in conjunction with Eutelsat, brings  France Telecom’s TV reach to  24 million French households, or 98.3 percent of the mainland population and is part of France Telecom’s effort to broaden its TV reach.
          “We moved to satellite because a lot of our customers were asking for TV services and could not get them,” Herve Payan, Orange’s senior vice president partnership and services-content, told Satellite News. “There was a demand we could not satisfy. TV is essential in keeping triple-play customers. We know that 40 percent of our customers would not have come if TV was not offered alongside Internet and telephony services. It is a very key asset for acquiring and retaining ADSL customers. It is an acquisition tool. Also, if you look at churn, the churn on customers taking all three services decreases significantly. We know that television over ADSL can reach only 50 percent in France. We need satellite to complement that.”
          While the operator has a growing presence in the TV market, Payan does not believe France Telecom is competing in the market against the likes of Canalsat, the biggest DTH platform in France, or BIS, another satellite pay-TV operator. “We are not adding another satellite offer,” he said. “For 29.90 euros ($39.03), we give you a set-top box where you can receive television services over satellite. You can receive video-on-demand over ADSL. It is a hybrid set-top box. It is the choice of the consumer which satellite offer you want to receive. We have signed an agreement with BIS so our customers can receive their offer. We are also talking to Canalsat so that our viewers can receive their bouquets. It is the same as on ADSL. We distribute Canalsat on ADSL. We distribute these channels, as well as our own services, which you will see in the coming months. We are a distributor. We don’t mind if the subscriber is subscribing to BIS, Canalsat or our own package of services or all three at the same time. We are neutral.”
          But the operator has taken its content strategy to the next stage, pushing new premium services such as a football offering that has gained 60,000 subscribers since August. “The idea is that by supplying people with telephony, broadband and video content, they are more sticky and less prone to churn,” John Davies, a telecoms equity analyst at Dresdner Kleinwort, said. “ That does seem to be a valid proposition compared to how other operators have performed. What is slightly more interesting with this one, is that they are the first incumbent telco to pay up a reasonable amount of cash for the TV rights.”
          Davies believes France Telecom was forced into an aggressive approach to video due to the nature of the competition in France. “The French market has bounced them into this approach, but to be fair to them, they could have ignored the threat and carried on. They haven’t covered themselves with glory outside of France. Orange UK is supposed to be launching a TV product, but that still hasn’t happened,” he said.
          Chris Alliot, a telecoms equity analyst at ABN Amro, believes entering into the TV arena involves a change of mindset for telcos. “France Telecom have a strategy where they are looking to provide content and they are developing their fixed line network to be able to cope. I think providing TV/video is reasonably important. Telcos need to adjust to operating within an open network environment, rather than the closed network they had historically. On an open network, the near-automatic right the network owner used to have to charge service revenues is slowly but surely evaporating. I think TV is quite an important element of the telcos’ future service provision, as they look to drive revenues across their network,” he said.
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