The European Telecommunication Market: France Telecom and Orange - Essay Example

The European telecommunication market is considered to be the worth of $474 billion (approx). France telecom is one of the market leaders in telecommunication sector with Orange as it’s the key brand capturing two-third of its entire market covering five continents with over 170 million customers. They are said to have sales of 52.9 billion euros in the year 2007. The growth of telecom companies is contributed mainly to the fundamental change in the structure of the telecommunication industry. This industry shifted its focus from being a monopolist to an industry that started encouraging the competition. Orange carries a vision of differentiating and focuses its future goals around customer acquisition and by introducing its wireless services. Its business strategies include acquiring and merging its businesses with other EU market players to maximize opportunities. Orange has to face crude criticism from its UK market for poor service and bad quality. Its business focuses on developing services and improvements in Network technologies, Functional middleware, Communication middleware and Application middleware that provides it a significant competitive edge. Introduction The European market, not is keeps in itself challenges for the entrants and survivors but also have immense growth opportunities for its buyers and sellers. With the joint market of all the European Union states, it provides a business largest platform to operate. Such has been the strategies of telecom operators as well. Most of the market leaders tried to capture as much of the different market segment as possible with diverse service and customized solutions. The focus of European harmonization moment is to discourage monopolies and encourage healthy competition across EU countries as well as pan-Europe and rest of the world. August 2003 heralds the end of BTs monopoly on the 192 directory enquiries service. 14 new companies are given licenses to compete. Over 700 million calls are made to directory enquiries in the UK each year. A similar process in Germany three years ago saw 39new licenses allocated. At present only two of these companies operate. By the end of the first week at least one firm is laying off temporary contract workers. The Communication Workers Union Pink Elephant campaign is launched and receives nationwide coverage. The campaign is calling upon BT to rethink the planned outsourcing of around 2,000 jobs to India (CWU Research, 2003). Orange-France Telecom leading Telecommunication Operators Microtel Communications Ltd was founded in year 1990 as a consortium comprising Pactel Corporation, British Aerospace, Millicom and French company Matra that was later on acquired by British Aerospace. The company got a license to develop a mobile network in UK in 1991 followed by its acquisition by Hutchison Telecommunications (UK) Ltd and renamed as Orange Personal Communications to depict its slogan: The Futures bright, the Futures Orange in 1994. France Telecom created in 1991 as public operator acquired Orange plc the holder of Orange group in 2001 and owned it hundred percent till 2001 when fifteen percent IPO’s were sold but acquired back later in 2003. Orange is ranked No.1 mobile telephone service for customer satisfaction in the UK for the fourth year running, according to the J.D Power and Associates mobile telephone customer satisfaction study (J.D Power and Associates, United Kingdom. 1998-2001). Orange has a vision of bright future where people can communicate wherever, whenever and however. It has strong commitment to its mission and is one of the most recognized brands with the aims of being ranked first for service, quality, innovation and choice. They were the first company to that introduced per second billing and videophone with efforts to develop wirefree™ technology and services. With services in twenty countries worldwide it has thirty million customers. In 1987, the presentation of a green paper, a document presents by the government that suggests improvement, highlighted the need of overhaul the dominance of telecom companies from the EU markets and introduce open markets for telecommunication services, equipments, value-added, data services, satellite, mobile and voice to introduce healthy competition. National Regulatory Authority was setup to regulate the telecom companies for fair business. Open Network Provision (ONP) Framework Directive in 1990 regularized open markets. In highly competitive European market where liberalization of telecom industry introduced challenges Orange reinforce its growth by customer intimacy, partnership, integration and convergence. The market where France telecom had to give up its monopoly and face competition, Orange succeeded in the development of networks, localizing customers and improving performance its focusing now on sales and marketing of what the customers want. They are striving to maximize the average revenue per unit for both voice and multimedia services. Their focus on their segment of market for each company where they operate with customized services shows there operational alignment with EU harmonized and integrated policies. By building ties between people, places and businesses and making exchanges easier we hope to contribute to the protection of our environment and the environment of future generations by making dematerialization of exchanges easier. We will continually strive to improve quality of service and innovation, especially with regard to health care and the development of eco-responsible products (Sustainable Development). Orange carries a vision of differentiating and plans to boost average customer utilization and introduction of its wireless services. It plans to make MMS as popular as SMS is. Deployment of Orange World Portal in France, UK, Poland, the Netherlands, Romania, Slovakia and Switzerland is one of the differentiating strategies. European Union’s vision of integration is the key business trait in Orange’s expansion by having fruitful partnerships with SMS+ and Orange Gallery to maximize GPRS network market by its innovative services. For those countries where Orange has no presence it has alliance with TIM (Telecom Italia Mobile), Telefonica Moviles and T- Mobile providing access to its customers. For corporate markets its strategy holds offering integrated services such as intranet and email access via wireless in partnership with palm and Oracle. Orange, France Telecom and Equant are cooperating to offer virtual private network services using GPRS. Orange in UK Orange has been considered one of the major players in UK; it provides mobile network operations as well as works as an internet service provider. Its mobile phone service offers different payment procedures and facilities. The company has attempted to converge its mobile and DSL broadband products and like its competitors offers DSL broadband services alongside its mobile services, at a subsidized rate. Orange now offers triple-play services converging mobile, landline and DSL broadband (Orange United Kingdom, n.d.). Orange UK operates a GPRS, Edge and 3G service and is in the process of rolling out a HSDPA network. Oranges 2G network covers 99% of the UK population and has the largest integrated 3G/2G network in the UK, Orange claims it spends up to 1.5 million pounds per day in its network (Orange Coverage Data, 2008). It has a retail estate in UK with over 300 stores. These are branded as "The Orange Shop" and operate as a direct sales channel (Orange United Kingdom, n.d.). Orange in the World Orange has market across Europe Orange Botswana Orange Cameroon, Caribbean, Dominica, Dominican Republic, Equatorial Guinea, France, Israel, Ivory Coast, Jordan, Liechtenstein, Madagascar, Mali, Moldova, Poland, Romania, Senegal, Slovakia, Spain, Switzerland, Reunion, Orange UK. Orange-controlled or joint-controlled interests (non-Orange branded mobile operators) in Austria, Belgium, Luxembourg, Egypt, Portugal. Risk Analysis In the time frame 1999-2002 France Telecom had a growth of 100 billion euros having eighty percent payments in cash, had a net consolidated financial debt of 14.6 billion euros. Its priority is to reduce debt by increase in capital with operational performance improvement TOP. The debt result from a number of negative factors that includes competition or decisions made by regulatory authorities that have the effect of reducing prices or revenues, the slowdown of the current growth in terms of business volume (wireless activities, data base services, Internet services),the decrease in business volume of older sectors (a tendency that is already being experienced in fixed line telephony),obstacles to the efforts to achieve savings in terms of operating expenses before amortization and depreciation and in terms of investments in tangible and intangible assets, the necessity, due to competition or technological advancement or changes in regulations, to incur operational or investment expenses that are greater than those planned (Form 20-F France Telecom, 2003). Controversies Orange was found to have data breaches and a violation of Data Protection Act when an investigation was carried out to access customers personal information. The ICO received a complaint regarding the way in which Orange processed personal information, and in particular the way in which new members of staff were allowed to share user names and passwords when accessing the company IT system. Following its investigation, the ICO found that Orange was not keeping its customers’ personal information secure and therefore was in breach of the Data Protection Act (Information Commissioner’s Office). It has a consumer forum website called Orange Problems, designed to monitor customer service of its broadband network in UK. It’s facing a problem of local loop unbundling. It has started Alpha testing traffic with 1500 randomly picked customers who have exceeded their bandwidth (Letter from Orange regarding restrictions, Orange customer services). Orange is the worst ISP in the UK; 68% of Orange customers who took part in the survey said they were dissatisfied with Oranges customer service. Orange was voted the most unreliable broadband provider, had the highest number of dissatisfied customers, and two thirds of Orange customers experienced problems canceling their Orange broadband (BBC Watchdog Broadband Survey). Telecommunication Industry In July 2003, to encourage all forms of communication and transmission a New Regulatory Framework (NRF) was enforced addressing the issues of internet traffic, voice calls and even television programs. This liberalization was necessary to introduce competition in the national market but to regulate the market across the EU states harmonization of regulations was need which in itself quite a complex task. A single market for telecommunication across the EU states has been the vision that faces a number of challenges including diversified product market, market monopolies and different approaches incase of allocating frequency spectrum, for instance, 3G spectrum. For better co-ordination among the regulatory authorities of EU member states the formation of an independent European Electronic Communications Market Authority was proposed in the Commission of EU regulation authority (COM, 2007). In almost each state telecommunication market was considered as national markets. Viviane Reding is the Commissioner for the Information Society, proposed the establishment of centralized Regulatory Authority that was not encouraged by the Commission members. Conclusion To survive in globalize market of diversified complexity its goal includes providing permanent access to personalized services, contact list, extended range of connectivity, unique authentication via fixed line, wireless, and WiFi access. The market for TV over mobile is at a relatively early stage and is evolving rapidly. To utilize this opportunity France Telecom has to address the issue of status of the associated frequencies availability, associated regulatory framework as well as the conditions attached to the use of these frequencies authorizations and content etc. A coherent authorization scheme, ensuring competition on a level needs to be implemented. With a just management of spectrum required to enable service availability at right time, right place, number, social utility, innovation and competition with international harmonization. For pan-European services the harmonization of licensing policies is extremely important. It triggers economy of scales and identify critical masses for launching new services. For high bandwidth intensive services specific frequency spectrum should be regulated with harmonized vision by the EU. The future competition is expected to be based on diversity of infrastructure rather than the diversity of services. Orange target has been improvements and gaining competitive edge by R&D efforts with regular development in different technologies through out its businesses in EU. Network technologies includes very high speed transmission on fixed line networks, optimized use of the Hertz spectrum, new generations of IP networks, Functional middleware, communications middleware (identity, presence, localization, contact list, profile management), security technologies, payment mechanisms, technologies to manage conditional access and rights, Application middleware refers to development, integration and distribution of applications, development interfaces (“API”), home, gateways, home networks, image processing (Form 20-F, 2003). Bibliography BBC Watchdog Broadband Survey. (2007). [Internet], Available from: [Accessed 23 March 2008] CWH, (2003) Abridged version of the CWU Research from September 2003. [Internet], Available from: www.utilitywatchuk.co.uk/telecoms/History-of-Telecommunications.pdf+historyof+Orange+Telecom&hl=en&ct=clnk&cd=6&gl=pk&client=firefox-a [Accessed 23 March 2008] Form 20-F France Telecom, (2003), [Internet], Available from: [Accessed 23 March 2008] J.D Power and Associates, (1998-2001) United Kingdom Mobile Telephone Customer Satisfaction Studies 2001 study based on a total 2,071 consumer responses.[Internet], Available from:http://www1.orange.co.uk/about/history.html [Accessed 23 March 2008] Letter from Orange regarding restrictions, Orange customer services. Wikipedia [Internet], [Accessed 23 March 2008] Orange PCS, (2008), Orange Coverage Data, Wikipedia [Internet], [Accessed 23 March 2008] Orange United Kingdom, Wikipedia. [Internet], Available from: [Accessed 23 March 2008] Orange and Littlewoods in breach of the Data Protection Act, (2007). The Information Commissioners Office. Retrieved on 2007-06-23. [Internet], [Accessed 23 March 2008] Sustainable Development, Sustainable development is at the heart of our business [Internet], Available from: http://www.orange.com/en_EN/innovation/invent/sustainable_development/ [Accessed 23 March 2008] Report on the outcome of the Review of the EU regulatory framework for electronic communications networks and services in accordance with Directive 2002/21/EC and Summary of the 2007 Reform Proposals, COM (2007) 696. Read More