MuniWireless

Two years ago, France granted 44 regional WiMAX licenses in the 3.5 GHz spectrum to operators and local governments, taking in €126 million in one of the most anticipated WiMAX auctions in Europe. This past summer, ARCEP, the French regulator conducted a survey to assess the speed of WiMAX deployments and determine whether WiMAX license holders had met the 30 June 2008 deadline. The findings are grim.

Hardly any WiMAX deployments in France

According to the terms of the WiMAX licenses, 3564 WiMAX locations should have gone “live” on 30 June 2008. Unfortunately, only 526 sites, a mere 15%, have been built out.

The initial number of license holders was 10 (6 region councils and 4 operators) two years ago, but went up to 19 (14 territorial collectives and 5 operators) because certain licenses have been resold to operators or transferred by regions to smaller local governmental entities. The local governmental entitles (departments or regions) have been extremely slow in deploying WiMAX, even those that have criticized the historical centralization of power in France (“Jacobinisme”).

Nine out of the 14 local governments that hold a WiMAX license today have not developed a single site! At a recent meeting in Paris of the “Committee for Public Initiative Networks”, René Souchon, President of the Auvergne Region said: “We applied to get WiMAX license two years ago. Thanks, we didn’t get one . . . It makes me feel better.” The image of proactive regional governments in France has been battered.

Commercial WiMAX operators dragging their feet

It’s not much better on the operator side. Iliad-Free, owner of a nationwide WiMAX license, was not included in ARCEP’s report because its deadline comes later (December 2008). Iliad-Free acquired its license from Altitude Telecom for €36 million in June 2006; they were not part of the original group of 44 licensees. However, Iliad-Free has been silent on the status of its WiMAX offering to end users.

Another operator, Bolloré Telecom, owns WiMAX licenses that cover almost all of France, but like Iliad-Free, Bolloré bought its licenses from another company (HDRR). Bolloré has deployed WiMAX only in 11 locations and even then, only as pilot sites. That means it has met a mere 1% of its obligation to deploy (out of 968 locations). It still has no commercial deployment or offering. When Bolloré bought HDRR’s licenses last June, Marc Taibeb, CEO of Bolloré Télécom was quoted saying:

“We needed these eight licenses, as well as the twelve we currently have (which cost €78 million), to roll-out a national network and launch a wireless broadband Internet offering across the country.”

That strategy has yet to be implemented.

Less than a year after the WiMAX license auction, Altitude Wireless bought eleven of the licenses held by Maxtel, a joint venture of SAPRR and Altitude Group. Maxtel has been disbanded since and Altitude Wireless has fulfilled only 13.6% of its obligation (only 212 sites of the 1796 have been covered with WiMAX).

Early consolidation among WiMAX operators

Of the operators mentioned in ARCEP’s report, HDRR and SHD have come closest to meeting the deadline, complying respectively, with 46% and 49% of their obligations. HDRR (a joint venture consisting of TDF (90%), LD Collectivités and Axione) developed a strategy to deploy WiMAX over “white zones”, that is, areas that are not covered by DSL. HDRR has deployed WiMAX in 170 of the 312 locations. But TDF abruptly pulled out of the joint venture, ended its involvement in WiMAX and sold its license to Bolloré Télécom.

SDH (Société Haut Débit) a subsidiary of operator SFR (part of Neuf-Vivendi) has deployed in 86 of the 177 locations. Two small operators, NiverLan and Nomotech have fulfilled 100% of their obligation. The “Haut-Rhin” region has also met its obligation to deploy WiMAX in the area for which it has received a license.

When ARCEP awarded the licenses, it gave operators the right to resell. As a result, consolidation of WiMAX operators began even before the market has had a chance to develop. Back then, some believed that the real value lay only in having nationwide coverage. But today the two operators (Bollore and Free) that do have nationwide licenses, still have no commercial networks in place, and none of them has published any clear intention to offer commercial services.

France does not allow mobile use of WiMAX

ARCEP has tried in its report to explain the reasons of the slow deployment of WiMAX in France. Although many have complained that WiMAX has been hyped and does not deliver on its promises (lack of long range coverage, lack of bandwidth, problems with trees, hills and bumpy landscape, difficulties in setting up towers, no TV on WiMAX,  and a lot of technical delays among the vendors),  ARCEP believes that key reason for the delays has been the lack of maturity in the technology. ARCEP cites the late approval of the 802.16e standard, which is now replacing 802.16d. It also blames poor performance and lack of interoperability of hardware, both of which have kept costs high and limited flexibility. However, one of the most significant restrictions on WiMAX service is that ARCEP itself does not allow “mobile” use of WIMAX, only fixed. That means an operator cannot offer mobile WiMAX service to compete with higher priced, lower bandwidth cellular data services. This restriction could keep WiMAX service from becoming a lucrative business for operators.

WiMAX equipment vendors have been trying to put a positive spin on the developments in France. Christian Olivry, Director of Public affairs at Motorola France said the technical delays are now behind and the technology is mature.

“WiMAX is a precursor of the 4G mobile generation. It allows all IP communications, what UMTS doesn’t, it is cheaper to deploy and maintain in terms of in infrastructure, cost and energy, and it is more spectrally efficient when frequencies are very rare and expensive. Compared to LTE, WiMAX is already here as LTE is years away.”

Gary Goldenberg, head of Alvarion France (a WiMAX equipment vendor), points out more than half of the installations running today are on the unlicensed frequencies 5.4 or 5.7 GHz.

Viable business model for covering rural areas?  Is France Telecom up to dirty tricks?

ARCEP is now trying to figure out whether the positioning of WiMAX in France –  as the “DSL” for areas that do not have wired broadband connections (i.e. rural areas) — is viable. ARCEP notes that France Telecom, which received no WiMAX licenses, has been playing catch up to cover these “white zones” with an offer called NRA ZO (central office for white zones) that directly competes with WiMAX operators. One of the “tricks” that France Telecom has played on the WiMAX market is to announce the rollout of DSL in a “white zone” when it learns that an operator is about to deploy WiMAX.

“They completely undercut WiMAX installations we have planned,” said Ariel Turpin, head of MIS at the Seine et Marne regional government. “In such a situation, how can you attract a WiMAX operator to do business in your region?”

Would allowing mobile WiMAX give operators a viable business model?

ARCEP points out that the withdrawal of TDF as an operator and the resale of HDRR licenses to Bollore show the weakness of a business model exclusively aimed at deploying fixed WiMAX in rural areas, especially when the incumbent DSL operator is extending wired broadband coverage. ARCEP concludes that only nationwide WiMAX operators have a viable profitable business model (although so far none of the nationwide license holders has a commercial offering), but it does not elaborate further on what would happen if these operators were allowed to offer mobile WiMAX. There seems to be no serious consideration of mobile WiMAX as an alternative to 3G and 4G cellular service. This is surprising given that cellular operators have hyped LTE (4G) as the next mobile broadband technology for cell phone users. Still ARCEP has made no cost/efficiency comparison between WiMAX and LTE.

Recently, the European Commission began working to extend and generalize the use of the 2.5GHz frequency all over Europe, which should give a better cost/efficiency ratio to WiMAX operators. But no one can expect an “unused” technology to switch to better frequencies within a very short period of time. So the question is: when will the WiMAX operators invest heavily in deployments in France? ARCEP concludes its report saying that the it is looking closely at the Sprint rollout of XOHM, the WiMAX service, in the US.

Related posts:

1. Is WiMAX dead in France?
2. Motorola and Bollore test WiMAX in Paris
3. France’s nationwide WiMAX operator is sole bidder for last 3G license