Neuf Cegetel outlines FTTx plans

MARCH 7, 2007 -- The Neuf Cegetel (search for Neuf Cegetel) group plans to offer fiber-based broadband services beginning next month in Paris. The carrier expects to pass a million homes by the end of 2009.

The FTTx strategy follows the carrier's previous fiber investments, which began in 1998 with the construction of a nationwide fiber network that saw the investment of �2.8 billion devoted too laying 45,000 km of cable, building metropolitan loops in major French cities, and connecting operator and enterprise sites (around 4,000 to date). Neuf Cegetel says the optical infrastructure provides full independence from France Telecom.

Neuf Cegetel subsequently began to roll out a mass market fiber-optic program in late 2006. The carrier expects to pass a million homes by the end of 2009, and to connect a total of 250,000 customers. Coverage areas will include Paris and its suburbs, districts of other major cities, and other areas selected on the basis of rollout costs and opportunities to increase market share. The target might be raised if investments can be "mutualized with other partner operators."

The program cost, split over 2007, 2008 and 2009, will be around �300 million. The average cost per customer (including infrastructure through to the home, plus connection) is expected to be around �1,200. Neuf Cegetel will mainly be offering an all-fiber connection based on FTTH technology; it will also offer FTTB using the existing copper cable and T-plugs already installed.

Neuf Cegetel's goals for the program include:

• increase mass market share in urban areas, and Paris in particular
  
• improve gross margin by sidestepping the cost of full unbundling
  
• increase differentiation from no-infrastructure operators to enhance competitiveness of the offer and customer loyalty
  
• pursue investment in future-proof technologies.
  

To start the roll out of its program rapidly, Neuf Cegetel acquired in early 2007 Médiafiber, which serves around 3,000 FTTH customers in the city of Pau (among around 40,000 homes passed). On February 20, 2007, the group announced an agreement to take a controlling stake in Erenis based in Paris. This transaction should be finalized in March. In addition, the group's LD Collectivités subsidiary recently won its first public contract to develop FTTH in the Paris region.

Through Erenis (operational in FTTx since 2003, with over 55,000 homes passed and over 10,000 customers connected), Neuf Cegetel hopes to get a jump on its competition in Paris. The group expects a sharp increase in the number of homes passed over the coming months, as negotiations are finalized with landlords of many buildings within the program's coverage area.

In April, Neuf Cegetel will be offering its new fiber-optics service for �29.90 per month in Paris. Like the "100% Neuf Box ADSL package," the new offer will include the phone line, unlimited calls to landline numbers in France and more than 30 countries, television programming, access to video on demand, and the Neuf Giga online storage service. With dynamic bandwidth of 50 Mbits/sec symmetrical, the service will handle downloads, file sharing, high-definition television, and online games comfortably, the carrier believes. The package will rely on the new FTTx-compatible Neuf Box launched in January.

Upgrades are already in the pipeline, the company adds. A package with 100-Mbit/sec access, including multi-channel, multi-room, high-definition television service, will be proposed soon.

While Neuf Cegetel will be connecting an increasing number of residential customers with fiber, unbundled lines will remain the predominant connection mode. After unbundling over 300 URA in 2006, more than any other alternative operator in France, Neuf Cegetel expects to have unbundled a total of 2,000 URA by 2008, up from 1,201 by the end of 2006.

By 2010, the group estimates that around 10% of its customers will be connected by FTTx (mostly in major urban centers), around 70% by unbundled DSL, and around 20% (in more sparsely populated areas) by other technologies, such as DSL option 3 and WiMax.

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