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(Last updated: 12 Jul 2007)
Trends and opportunities
The market
In the past few years, the ICT sector in France has had an average yearly growth of eight per cent, with telecommunications and corporate equipment as the backbone. France was not involved in the Internet boom until 2000, when a large number of players entered the market forcing competition and downward price pressures, with some Internet Service Providers (ISPs) even offering free services. It has rapidly caught up and now ranks sixth globally in terms of business Internet connectivity.
With the economic downturn came industry consolidation, and yet there is still room for growth in B2C and yearly growth rate for some segments, such as game console software surpassing 24 per cent.
Telecommunications
The French telecommunications industry is very concentrated - 18 large companies employ more than 500 employees. They represent nine per cent of the total number of companies in the sector, but employ 81 of its employees. These companies also assure 90 per cent of total sales, 95 per cent of exports and cover 91 per cent of equipment investment. The export rate for these companies is 55.8 per cent. They are more manufacture based, while the other smaller companies are predominantly service based. Outsourcing is very developed in this sector (24 per cent of production).
France Telecom has become established in 220 countries worldwide. It provides local, long-distance, and international calling services, as well as wireless phone service and data transmission. The former monopoly has 34 million fixed-line telephone subscribers in France, and its majority-owned Groupe Wanadoo is a leading European directory publisher and ISP.
In terms of local phone calls, France Telecom covers 80 per cent of these.
France Telecom has brought together its mobile phone operations under the umbrella of its majority-owned Orange unit. Orange is France's number one mobile phone company, with over 19 million subscribers. In addition, France Telecom controls Equant, which provides international data and voice services to business customers. Equant was combined with the data services business of France Telecom's Global One unit in 2001. Though mandated by law to be France Telecom's majority owner, the French government has reduced its stake to 55.5 per cent.
Internet
France's experience over the past two decades with the Minitel, the national electronic videotext terminal, has put them in good stead for the Internet.
Internet access tariffs are amongst the lowest in Europe resulting in increasing acceptance rates both for businesses and consumers.
With regards to ISPs, consolidation has been popular. French ISP, Wanadoo, one of Europe's largest providers has been on a buying everything from small ISPs to large content portals, giving it a stranglehold on France's dot-com industry. The shake-out has left only a handful of companies to try and grab a share of a consumer market that is still on the rise.
Google is the most used Internet provider (54.4 per cent of cases). Wanadoo and Yahoo have decreased in size although Yahoos take over of Inktomi should now enable the company to catch up.
E-commerce
E-commerce has grown dramatically in France over the last three years. Seventy-three per cent of small to medium-sized businesses are now connected to the Internet. Online security remains an important issue and cultural resistance also plays a fundamental role in France's relatively slow take up of e-commerce.
Opportunities
With more than six per cent of GDP, the ICT sector in France contributes more to the nation's growth than the automobile and energy sectors combined. It is the biggest employing sector creating more than 400,000 jobs in the past three years.
Research in the ICT sector represents 25 per cent of industrial research in the country. However, the Parisian Chamber of Commerce believes France is lagging behind in R&D. THe most recent figures suggest that R&D in France was around 19 per cent compared to 35 per cent in the USA, and 34 per cent in Japan. France realises that the country's competitiveness depends on such investments.
Over the last few years France has raced to catch up with its European neighbours in the uptake of the Internet and it now ranks sixth in terms of businesses with Internet access (behind USA, Sweden, UK, Germany and Japan). In terms of businesses with Internet sites, France is still far behind.
France's rapidly developing telecommunications sector provides great opportunities for international companies. Current growth trends indicate that France will continue to be one of the world's most attractive markets for:
- mobile infrastructure
- satellite equipment
- optical fibre
- telephone sets
- mobile telephones
- pagers
- Internet services
Telecommunications liberalisation, resulted in the sudden growth of thousands of small players, however, these companies disappeared rapidly in a wave of consolidation and France Telecom remains the dominant player. However, the big players rely on third parties for technical innovation and economically efficient hardware and software.
Other key areas of growth in France include:
- Demand for system integrators is expected to grow on average 24.5 per cent each year for the next five years.
- Services remain positive - the ICT industry employs approximately 274,000 people and services more than 360,000 people. In services, telecommunications dominates in terms of turnover (57 per cent), then computer services (43 per cent).
- Systems security – this will increase rapidly with the increasing uptake of Internet services and e-commerce. It is anticipated to grow at 20 per cent annually until 2005.
- The uptake of the Application Service Provider (ASP) role as well as traditional services indicates increasing market demand.
- M-commerce – Wireless Application Protocol (WAP) has already made its debut in the French market and while it has been received by the French public with little enthusiasm, French businesses are acknowledging the need to plan ahead. SMS is decidedly more popular with 94 per cent of French mobile users familiar with the technology. This would indicate that the lack of WAP acceptance has more to do with a lack of a 'killer application' than reluctance to use new mobile technologies.
- E-learning - education institutions have excellent Internet access. The French Government has set various goals such as providing one computer for every three pupils at schools and one for every two university students. They also aim to create a certificate of computer skills.
Competitive environment
The French telecommunications industry is competitive on a world-wide scale. The USA, however, still remains the number one supplier for France.
France Telecom's nearest rival is Cegetel the telecommunications arm of Vivendi Universal. Cegetel maintains more than 2.5 million fixed lines, 16 million clients, approximatively 20 per cent of the French telecommunications market. It also provides wireless phone services to about 13 million customers through its SFR unit. A Cegetel joint venture with French state-owned rail company SNCF, operates a fibre-optic data transmission network.
In the mobile market the main players are France Telecom with 49 per cent market share, SFR (Vivendi) at 35.71 per cent, and Bouygues Telecom at 17.6 per cent.
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