French team competes via fiber

July 1, 1997

French team competes via fiber

edward harroff

In preparation for the 1998 deregulation of the US$28 billion French telecommunications market, sncf, the country`s state-owned railway, has finalized its partnership with Compagnie Generale des Eaux (cge), a major water utility that is already a leader in the emerging telecommunications market. To handle its telecommunications ventures, sncf has created a subsidiary called Telecom Developpement (TD) Group, with a two-company structure that consists of the following:

TD will manage the infrastructure of the sncf network. The network currently consists of 9000 km of fiber-optic cable and is expected to grow to 11,000 km of fiber-optic cable by the end of this year. (The network also has 30,000 km of copper cable.)

TD Services will develop a full range of services across the network.

Cegetel, a subsidiary of cge, will hold 49.9% of TD Group, and sncf will remain the majority shareholder with 51.1%.

cge already has a well-established telecommunications infrastructure. It owns the country`s second-biggest cable-TV company and mobile phone operator, as well as other telecommunications service companies. Its partnership with Mannesmann and British Telecom (BT) for international service is believed to be a key reason why it was chosen.

By accepting the cge bid, sncf has reinforced Cegetel`s place as France`s second-largest telecommunications group after France Telecom. "It`s not a question of building a national network from scratch but of adapting an existing infrastructure," explains Paul Knott, senior consultant at Analsys Publications Ltd. "It means that emerging operators will be able to deliver nationwide services in 17 to 24 months rather than 3 to 5 years."

Cegetel was chosen over competitor Bouygues stet/Veba despite an equally strong technical offer. The major difference was that Cegetel submitted an offer that included Mannesmann and BT for the international extension of services into the United Kingdom, Germany, and the United States via Concert, the recently formed long- distance carrier joint venture between mci and BT (see Lightwave, December 1996, page 1). Analysts estimate that future infrastructure investments for TD Services will be at least $370 million to $550 million.

The new joint venture has to support sncf`s earlier commitment to the pan-European consortium, hitrail, which consists of 11 European railway companies and is a 50% shareholder in Hermes Europe Railtel. Hermes is building and operating an alternative pan-European fiber-optic telecommunications network, which thus far is only in The Netherlands; Belgian links are currently being implemented. According to Gerard Caccappolo, director of marketing and sales for Hermes Europe Railtel, any excess capacity within sncf`s fiber-optic network can be incorporated into the company`s pan-European system. Loops between Paris and Lille, Rennes, Perpignan, and Strasbourg are key links.

Other infrastructure providers, such as the French turnpike operator Sanef, will also help complement TD`s current capacity on heavily saturated routes, such as that between Brussels and Paris.

Cegetel is expected to integrate the TD fiber-optic network into its other existing telecommunications networks--including sfr, France`s second-largest mobile network--and with its local fixed communications operations in 20 metropolitan areas (anticipated to be 50 in 1998). Cegetel is also expected to provide the international interconnect. The initial links will be with Mannesmann in Germany and mci/bt Concert for the international extensions into the United Kingdom and the Americas.

According to Jean-Louis Previdi, program director for Europe, meta Group, "With this TD announcement, BT/Cegetel has just improved its competitive position against France Telecom. This captive fiber-optic network will permit TD Services to offer more services to both the mass-consumer and business-to-business markets. This venture will also better equip Cegetel to manage complex, state-of-the-art fiber-optic backbone network systems. BT will use this opportunity to grab a larger share of the cross-border bandwidth that is currently served by France Telecom."

According to Helen Pickance, an analyst at Dataquest, in London, "This will mark a further step toward liberalizing telecommunications in France and establishing a second strong competitor to France Telecom. Bouygues Telecom needs to rework its near-term plan and make another infrastructure partnership before it can really compete against France Telecom and Cegetel."

This management approach of optimizing the existing alternative fiber-optic infra structure in Europe has been already started in several countries that are anticipating the Commission of the European Communities directive to open markets to competition at year-end. Some recent initiatives include the following:

Racal Network Services/BR Telecommunications Ltd. has bought rights from British Rail to use its entire fiber-optic network in the United Kingdom.

Energis Communications Ltd. is using fiber-optic cable along power lines in the United Kingdom.

Banverket BV Telecom is using the existing railway-owned fiber-optic network in Sweden.

New Telco, a joint venture among Union Bank of Switzerland, Migros (the largest Swiss retail food distributor), BT, and sbb Swiss Federal Railway, is creating an all fiber-optic network that will become the core of Switzerland`s second-largest telecommunications company.

Enertel BV is running fiber-optic cable along a regional Rotterdam utility company`s right-of-way in The Netherlands.

Vebacom GmbH built an all fiber-optic telecommunications network in Dusseldorf, and rwe Telliance AG has built a similar network in Essen by using regional power distribution right-of-way in Germany. q

Edward Harroff writes on telecommunications issues from Bellevue, Switzerland.


"Emerging operators will be able to deliver nationwide services in 17 to 24 months rather than 3 to 5 years."


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